How much “we buy houses” companies pay varies depending on the company’s type and how the deal is structured.
To help you understand what numbers to expect, this article explores the influencing factors and the context for comparing investor offers with traditional sales.
Get the details below.
How Much Will an Investor Pay for My House?
Investors don’t all operate exactly the same way. Here’s a closer look at elements that impact how much you’ll get.
70% Rule
Many investors use the 70% rule to determine their cash offers. So, being familiar with how this guideline works will give you a sense of how much an investor will pay for your home.
Investors start by looking at the property’s after-repair value (ARV), which is what it’s estimated to be worth once all repairs and renovations are finished.
They take 70% of that number and subtract anticipated repair costs. They’ll also deduct closing costs if you want them to pay those. The result is the highest offer they’ll make.
To illustrate:
ARV: $300,000
70% of the ARV: $210,000
Less repair costs and closing costs: $30,000
Cash offer: $180,000
This approach allows investors to fix up the property, cover holding and marketing costs during the process, and still make a profit.
Note that the percentage in this formula isn’t 70% in all locations. Local resale demand, repair costs, and an investor’s tolerance for risk can raise or lower that number.
Wholesale Deals
Not every cash offer on a home comes directly from whoever ultimately purchases your property. Sometimes, it’s from an intermediary called a real estate wholesaler.
Real estate wholesaling occurs when someone puts your house under contract, as if they were a cash buyer, but then passes the purchase rights to an end buyer, who is the real investor.
As a seller, what does that mean for you in terms of how much investors pay for houses when a wholesaler is involved?
The wholesaler typically follows the 70% rule like any other investor, which means 30% of the ARV comes off the top.
Then they factor in an assignment fee for themselves (a few thousand, on average), plus repair and closing costs. All of these reduce the cash offer.
This setup reflects how “we buy houses” companies work in wholesaling deals, but it can lead to questionable practices.
Most wholesalers operate legitimately, but some give sellers the wrong impression about how high the final offer will be.
In some cases, these practices can even cross into “we buy houses” scams, leaving sellers with much less cash than expected.
iBuyers’ Processing Fees
Another category of investor is the iBuyer. These companies use data and automation to evaluate your home, which streamlines the selling process.
That makes getting a cash offer on your property quick and easy. But that speed and convenience come with a cost.
iBuyers charge a processing fee to offset their cost for handling your transaction, including aspects like paperwork, rapid turnaround processes, and inspections.
While processing fees vary by company, they typically range from 5% to 6% of the offer price. That deduction comes out of your proceeds, in addition to any repair and closing costs.
So you can see that how much a cash buyer will pay for your house — when it’s an iBuyer — can end up being noticeably less than the initial offer.
Even so, there are still core benefits of a cash offer on a home that may outweigh the processing fee.
That’s why, before moving forward, it’s wise to consider those benefits alongside the specific pros and cons of iBuyers to help you determine if this type of sale fits your goals.
Offer vs Net Proceeds
When considering whether you should sell your house to an investor or do a traditional sale, it’s easy to focus only on the offer price.
But the comparison that really matters is net proceeds — what you clear from the sale.
Once you account for deductions, the gap between net proceeds for the two approaches may not be as significant as you think.
That’s because offers you receive when selling a home to a cash buyer tend to be straightforward. What you see is mostly what you’ll get.
They usually cover closing costs and there are no Realtor commissions. So, you avoid those expenses.
Contrast that offer with one from a traditional buyer, which at first glance may look higher on paper.
But at closing, you’ll pay between 2.5% and 6% in Realtor commissions and another 2%–3% in closing costs. That means a $300,000 offer could leave you with $27,000 less after expenses.
The bottom line is: step back and do the math on a Realtor-brokered offer (including all expenses) before you compare it with how much an investor will pay for your house.
Looking at what you’ll walk away with makes it easier to see how selling a home to an investor vs using a Realtor stacks up, so you can more clearly decide what works best for your needs.
Where to Find an Ethical Cash Buyer?
Just like with any other business, not all “we buy houses” companies are ethical. That’s why it’s essential to make sure you’re working with a vetted buyer so that the offer is financially sound.
Fortunately, finding an ethical cash buyer is easy with our nationwide network of trusted investors.
Simply request cash offers on your house from several reputable and professional buyers through our website.
That lets you compare multiple proposals and choose the best one. Or, you can opt not to accept any of them.
There’s no requirement to proceed with any of the offers you may get and no fees to accept or reject them.
When you’re ready, connect with cash house buyers in your area to get an offer with aspects tailored to your situation.
