What Is a Fair Cash Offer for a House? How SimpliHomes Calculates Yours
When a company tells you they'll give you a "fair cash offer" for your house, what does that actually mean? How do they arrive at the number? What are they factoring in, and what are they not telling you? These are exactly the right questions to ask — and SimpliHomes will answer all of them before you sign anything. We'd rather you understand our offer than accept something you don't understand. Here's how we actually calculate what we offer for St. Louis area homes — and how to evaluate whether any cash offer you receive is fair.
There's no universal definition of "fair" in real estate. A fair offer is one that accurately reflects the property's actual condition and the real market, that's explained transparently, and that leaves you with enough information to compare it honestly against your alternatives. That's the standard we hold ourselves to.
How Cash Buyers Calculate Offers: The Basic Formula
Legitimate cash buyers use a version of this calculation:
After Repair Value (ARV)
What the property would sell for on the open market after it's been fully renovated and updated to comparable neighborhood standards. This is based on recent comparable sales in your specific area.
Minus: Estimated Repair and Renovation Costs
Everything required to bring the property to sellable condition — roof, HVAC, kitchen, baths, flooring, paint, landscaping, and any structural or mechanical issues.
Minus: Holding and Transaction Costs
The buyer holds the property for months during renovation. During that time they pay taxes, insurance, utilities, and financing costs. They also pay closing costs on both the buy and the sell side.
Minus: Profit Margin
Cash buyers are running a business. Their margin is how they pay for staff, operations, and the risk that a renovation goes over budget or takes longer than planned. A sustainable margin is typically 10-15% of ARV. Buyers who claim to operate on razor-thin margins often make up for it by lowballing on repair estimates or renegotiating at the last minute.
What's left after subtracting all of these from the ARV is approximately what a cash buyer can offer and still operate sustainably.
What Makes an Offer Actually Fair
A fair offer isn't necessarily the highest possible number — it's an accurate number based on honest inputs. An offer is fair when the ARV is based on real comparable sales, not inflated. When the repair estimates are realistic and specific, not padded. When the buyer discloses their costs and margin without being asked. And when the offer doesn't change significantly after the property inspection without a real reason.
An offer is unfair when it's calculated on a too-low ARV, when repair costs are exaggerated, or when a high initial offer is used to get you under contract before being reduced with vague "findings."
The Price Reduction After Inspection: A Common Tactic
Some cash buyers make a high initial offer — higher than the math justifies — to win the contract, then come back shortly before closing with a significantly lower number, citing "issues found during inspection." At that point, many homeowners feel trapped — they've told people the house is sold, they've made plans, and starting over feels exhausting. A legitimate cash buyer builds the condition into the initial offer. Our offer to you is our offer. We don't use inspection findings as a renegotiation tool after the fact.
How to Evaluate Any Offer You Receive
Ask for the ARV they used and what comparables support it. Ask for a breakdown of the repair estimate. Ask what their expected holding period is. Ask what costs they're accounting for. If a buyer can't or won't answer these questions, that tells you something. If the answers are vague or inconsistent, that tells you more.
Also: get more than one offer if you have time. Even in a cash sale, competition is a tool. Two real offers give you real information about what the market thinks your property is worth.
How SimpliHomes Builds Our Offers
We'll walk you through our ARV, our repair estimate, and the logic behind our number. We pull actual comparable sales in your specific neighborhood. Our repair estimate is based on a walkthrough of your property, not a formula applied remotely. And our offer doesn't change after the fact based on pretextual inspection findings. If we see something significant during our walkthrough that affects the number, we discuss it with you before making the offer — not after you've signed.
If you want to understand what your St. Louis area home is actually worth as a cash sale, start with SimpliHomes. We'll give you our offer and our reasoning, and we'll answer every question you have about how we got there. You can also learn more about working with SimpliHomes before you reach out.
General information only. Not legal or financial advice. Please consult qualified professionals before making real estate decisions.