How Much Should a Cash Buyer Pay for My House?
A fair cash offer depends on who's buying. Investors typically pay 60-70% of your home's after-repair value, with most capping at 68-69% ARV. Owner-occupants pay 76-84% because they rely on appreciation, not flip margins. On a $1,000,000 LA home, that's the difference between a $650,000 investor offer and an $800,000+ market sale.
When a cash buyer makes an offer on your Pasadena home or anywhere in Los Angeles County, how do you know if it's fair?
The honest answer: it depends entirely on who's making the offer.
After over a decade working with professional flippers—including investors with hedge fund backing—I've learned exactly how they calculate offers. I've watched hundreds of deals from acquisition through renovation to resale. And I've seen the formulas they refuse to break.
But I've also learned something most sellers never hear: there's an entirely different buyer pool that pays significantly more, even for homes that need work. Understanding both pools is the key to knowing whether any cash offer is fair. If you've received an offer and want to know if it's fair, call (213) 444-2225 for a free evaluation.
The Two Buyer Pools (And Why One Pays More)
Here's what most cash buyer content won't tell you—because most of it is written BY cash buying companies.
There are two completely different types of buyers for your home:
Pool #1: Investors (60-70% of Value)
Investors buy properties to make money. They'll renovate and flip, or rent it out. Either way, they need margin.
Most investors cap themselves around 68-69% of the after-repair value. That's their ceiling—the absolute maximum they'll pay.
But that's not what they offer first. Their opening bid—what I call their "home run" offer—is typically 60-65% of ARV. They're hoping you'll accept, but they're willing to come up. However, they only come up if the homeowner is savvy enough to push back.
Why they MUST pay less:
- Holding costs during renovation (taxes, insurance, utilities)
- Renovation costs (materials, labor, permits, surprises)
- Selling costs when they resell (commissions, concessions)
- Profit margin (their actual return for taking the risk)
Pool #2: Owner-Occupants (76-84% of Value)
Here's what changes everything: owner-occupants—people who will actually live in your home—pay significantly more.
An owner-user will typically pay 76-84% of ARV because they're going to live in it and add value themselves. They don't need the same margins as investors because they're relying on long-term appreciation of the property.
This buyer pool exists for homes that need work. You don't have to sell to an investor just because your property isn't perfect.
The Real Numbers: What Investors Actually Offer
What This Looks Like on LA Properties
| Property ARV | Investor "Home Run" | Investor Max | Owner-Occupant |
|---|---|---|---|
| $700,000 | $420K-$455K | $476K-$490K | $532K-$588K |
| $900,000 | $540K-$585K | $612K-$630K | $684K-$756K |
| $1,000,000 | $600K-$650K | $680K-$700K | $760K-$840K |
| $1,200,000 | $720K-$780K | $816K-$840K | $912K-$1.008M |
The gap between investor maximum and owner-occupant range is $60,000-$170,000. That's real money—retirement savings, college funds, debt elimination—that belongs to you, not to an investor's profit margin.
The Character Home Premium You Might Be Missing
If you own a character home in Los Angeles, there's an additional premium wholesalers and investors exploit.
Craftsman bungalows, Tudor homes, Mid-Century Modern, Victorian, Spanish Revival—these properties trade 10-15% higher than standard homes in the same area. Buyers pay premiums for architectural details, original features, and neighborhood character.
But investors run their standard formulas. They make their standard offers. And they hope you don't realize your home commands a premium.
The "Condition Embarrassment" Trap
Here's a pattern I see constantly with long-term Los Angeles homeowners.
People who've lived in their home for 20, 30, 40 years often feel embarrassed about the condition. The kitchen hasn't been updated since the 90s. There's deferred maintenance. Things need work.
That embarrassment leads them to undervalue their own property.
Wholesalers and investors know this. They target long-term owners specifically because those sellers assume "my house is a mess, so I have to sell to an investor."
That's simply not true. Owner-occupants buy dated homes all the time. They see potential where you see problems. And they pay 76-84% instead of 65-70%.
How to Know If Your Cash Offer Is Fair
Minimum Acceptable: 70% ARV from a Verified Buyer
If you're going to accept a cash offer, it should be at least 70% of your home's true after-repair value—and that's from a legitimate buyer with verified funds, 3% earnest money, and a 7-14 day close.
Anything below 70% from someone who needs 30-60 days? You're dealing with a wholesaler padding their margins at your expense.
How to Push Back
Remember: their first offer is their "home run" offer—60-65% of ARV. They're willing to pay more.
If you know your numbers, you have leverage. Tell them you've researched comparable sales, you know the ARV, and their offer needs to be at least 70% or you're exploring other options.
Investors who actually have funds and actually want your property will come up. Wholesalers who were hoping to flip your contract for a quick fee will disappear—which tells you everything you need to know.
The Proof: Real Numbers from Real Deals
| Approach | Offer/Sale Price | Seller Nets |
|---|---|---|
| Accept first cash offer | $600K-$650K | $600K-$650K |
| Negotiate with investor | $680K-$700K | $680K-$700K |
| As-is market exposure | $760K-$840K | $720K-$800K* |
| Light prep + market | $850K-$920K | $800K-$870K* |
*After typical commission
Want to See What Your 4 Options Look Like?
Wondering if your cash offer is fair? We'll show you exactly where it falls—and what your alternatives would actually net:
- What a legitimate cash buyer would pay (their ceiling, not their lowball)
- What your home would sell for as-is on the open market
- What light preparation would yield
- What full market exposure would bring
Real numbers. Your property. No obligation.
📞 (213) 444-2225 · ✉️ [email protected]
Frequently Asked Questions
What percentage of market value do cash buyers pay?
Investors typically pay 60-70% of after-repair value, with 68-69% being their ceiling. Their opening offer is usually 60-65%, expecting negotiation. Owner-occupants, by contrast, pay 76-84% of ARV even for homes needing work.
Is a cash offer always lower than market value?
Yes, because cash buyers need profit margins for renovation, holding costs, and resale. However, the gap varies dramatically: investors offer 30-40% below market while owner-occupants on the open market typically pay just 15-25% below full retail value.
How do I know the after-repair value of my home?
Look at recent sales of fully renovated comparable homes in your neighborhood. A local real estate agent can provide this analysis at no cost—and it's essential before evaluating any cash offer.
Can I negotiate a cash offer higher?
Yes. Investors expect negotiation and typically leave room in their opening offer. If you know your ARV and push back, most legitimate investors will come up to their 68-70% ceiling. Wholesalers may simply disappear—which reveals they weren't real buyers.
Why would an owner-occupant pay more for a house that needs work?
Owner-occupants aren't trying to flip your home for profit. They're buying a place to live and relying on long-term appreciation. They'll make updates over time, build equity, and don't need the same margins an investor requires.
This article provides general information about real estate transactions in Los Angeles County. Property values vary based on condition, location, and market conditions. Consult with qualified real estate professionals for advice specific to your property.
