How Much Will an Investor Pay for My House?
The question sellers ask me most when they’re thinking about working with a cash buyer is what number to expect. In most of the deals we’ve worked through across Orange County and Southern California, offers land somewhere in the range of 60 to 75 percent of what the house would sell for fully repaired, minus the cost of whatever work it needs.
That number’s going to depend on a few things that vary deal by deal, and those are worth understanding before you start taking calls.
I’ve been buying houses in Southern California since 2008, and before that I spent seven years as a certified residential appraiser, starting in 2003. That’s kind of where my read on this comes from, both sides of the valuation.
I’m also one of those cash investors, I have a direct financial interest in this, and I want to say that upfront.
What Goes Into the Number
A Zillow estimate or what your neighbor got isn’t where an investor offer is going to start. Investor offers are built on a different formula entirely.
The ARV Formula
The calculation starts with what the house would sell for fully updated and ready for a traditional buyer, then works backward based on what the repairs are actually going to cost.
If a house would be worth $500,000 fixed up and needs $60,000 in work, we’re looking at $440,000 before our margin, and that’s the number the offer is built off of.
Holding Costs and Margin
On a fix-and-flip in Los Angeles County, holding costs alone can run anywhere from $15,000 to $40,000 depending on how long the project takes, and that comes out before there’s any return on the deal.
Sellers sometimes look surprised when a house needing $80,000 in work gets a lower offer than one needing $20,000, even when the neighborhoods are comparable, and the reason is the repair number really does run directly through the math.
Running the Formula Yourself
Most fix-and-flip buyers are running some version of the same formula, and the basic math is ARV times around 70 percent, minus the repair estimate, and that’s where the max offer lands. It’s not complicated; it’s just what makes the deal pencil out for them.
If you’re in a Riverside neighborhood where fully updated houses are selling around $600,000 and yours needs $45,000 in work, the 70 percent side of the math gets you to $420,000, and then the repair deduction brings it to roughly $375,000 as a starting point for what a fix-and-flip buyer will offer.
In LA markets where comps are running $1.1M or above, the same percentage spread produces a much bigger absolute number, and we’ve had sellers in those markets feel like an investor offer was insulting when the discount off ARV was actually similar to what we were offering on comparable properties in the Inland Empire.
The 60 to 75 percent range isn’t a single formula, a buyer doing a lighter rehab and planning a quick resale might come in closer to 73 or 75 percent, and a buyer taking on a heavy renovation in an uncertain market might need more room and come in at 62 or 63.
iBuyers Use a Different Model
I’m describing what a local fix-and-flip investor is doing with that number. iBuyers like Opendoor and Offerpad use algorithmic pricing and tend to offer closer to market value, though a service fee of 5 to 8 percent often closes most of that gap on the net.
Most iBuyer programs have a fairly narrow eligibility range and won’t touch properties with significant deferred maintenance or title complications. Sellers who come to me after an iBuyer decline are usually comparing two offers that were built on completely different assumptions.
A Deal That Showed Both Sides
58th Place, Los Angeles
A seller came to me in early 2022 on a house at 58th Pl in Los Angeles.
She was weighing whether to fix the property up and list it or take a cash offer, and she wasn’t sure what it was actually worth or how long a traditional sale would take.
We walked through the repair scope together and gave her a number she could compare against what a listing might get her.
We closed at $695,000 in February 2022 and she was able to move on without taking on a renovation she wasn’t sure she wanted to manage.
That deal is a pretty common version of how the weighing plays out, the seller had a real option on both sides and the cash close was about certainty more than the highest possible number, and most of the calls I get run pretty close to that same framing.
Why Offers Vary Between Buyers
When we’re running numbers alongside other buyers on the same property, the spread can be $40,000 or more depending on what each of them is planning to do with it.
We took calls on the same Riverside house from two buyers in the same week and the offers were about $45,000 apart, and neither one was out of line with what their plan needed the numbers to be.
Olmsted Avenue, Los Angeles
We closed on a property on Olmsted Ave in Los Angeles in April 2021 at $850,000. It had been listed at $1.15M with an agent and buyer interest ran into the $900s, but the seller came down because she wanted a close date she could count on, and the repair scope on that house wasn’t small.
What Moves the Number Up or Down
What the Walkthrough Reveals
I’ve made offers on houses where the photos made it look like a teardown and the walk-through came back mostly paint and flooring, and those conversations go differently than the ones where you open a wall and find something that changes the whole estimate.
What Sellers Can Do Before the Walkthrough
A few things that consistently affect the offer: accessible utilities. If the water and power aren’t on during the walkthrough, an investor is estimating conditions they can’t verify, and that uncertainty goes into the repair number. A house where every room is accessible and the utilities are live lets the buyer price the work more precisely, and that precision tends to come back as a tighter offer rather than a wider one built around unknowns.
If you have records for recent work, permits pulled for a roof or HVAC, receipts from a contractor, those documents matter in the walkthrough conversation. An investor who can verify that the roof is four years old prices it differently than one who’s looking at the same roof without any documentation and has to assume worst case. I’ve had sellers hand me a folder of receipts at the door and watched that straightforwardly change where the offer landed.
On deals where I know there are multiple buyers looking, the offers tend to come in higher than on properties where the seller is talking to one buyer at a time. Having two or three buyers walk the same week isn’t always practical, but on properties that are genuinely attractive to investors, it’s worth the coordination.
Seller Situation
On deals where the seller has an estate to close or an overlapping purchase they’re trying to coordinate, the conversation starts in a different place, and buyers who’ve been around long enough pick that up pretty quickly.
For what it’s worth, we’ve watched buyers come back with a higher number once they found out there was someone else looking at the property, and that’s usually a 5 or 6 percent shift on deals that would have come in lower.
What Sellers Actually Net
Sellers ask me all the time what the comparison looks like, and the conversation usually starts getting interesting once we actually put both paths on paper instead of comparing headline numbers.
When I walk through a typical listing scenario in Southern California with someone, commissions and closing costs tend to come out somewhere between 6 and 8 percent before we even get to repair work or what happens if the property sits a while.
Commissions and closing costs in California typically run 6 to 8 percent before repair work or carrying costs are factored in. Each line item is at seller closing costs in California.
On a house that needs significant work, a lot of that investor discount is just repairs the seller wasn’t going to pay for anyway, and the sellers who actually run both sets of numbers tend to walk away from that conversation with a pretty different read on the gap.
Getting a Real Number
Most of my calls start with someone wanting a number before I’ve been in the house, and I’ll put a range out there, but I always let them know it’s going to shift once I’ve actually walked it.
Of the roughest-looking houses I’ve walked into, a lot of them came back lighter on work than the photos suggested, and the repair estimate ended up much more manageable than the exterior made it look.
We’ve seen sellers come back after getting two or three buyers to walk the same property, and by the time they’ve done that, the range they’re working with is a lot clearer.
The full comparison is at the agent vs. investor breakdown.
How Quickly Can You Actually Close
On a cash close, most of the deals we’ve done go from accepted offer to funded in 10 to 14 days, and the title company is doing most of the work during that window.
Where we’ve seen closings stretch past the original date, it’s usually been something the title officer found, a lien that needed to be cleared or a signature issue on an older deed, and they work through most of that inside escrow without the close date moving.
The day-by-day close breakdown is at how long it takes to close on a house with cash.
Getting the Right Help
On any deal where someone’s seriously considering both paths, I’ll tell them to talk to a licensed agent as well and get a real read on what the listing timeline looks like for their specific property.
We’ve watched enough sellers go through a frustrating experience with an operation that doesn’t actually close the way it says it will. The signals to watch for are at how to spot a we buy houses scam in California.
We buy houses throughout Southern California, and if your property is there, we’re happy to walk through the math at no obligation.
You can reach us at (951) 331-3844.
Doug Van Soest spent seven years as a certified residential appraiser starting in 2003 before co-founding SoCal Home Buyers with his wife Andrea Van Soest, CA DRE #01505854. Together they have closed over 400 transactions across Southern California.ith roughly 90 percent of those deals made directly with sellers off-market.
