What Is ARV? How Cash Buyers Actually Price Your Home
Cash offers can feel like a mystery number. They're not. Here's the exact formula most legitimate cash buyers use — so you can check whether an offer is fair.
If you've gotten a cash offer and wondered "how did they come up with that?", this article is for you. There's a standard formula, and understanding it helps you tell a fair offer from a lowball.
ARV: After-Repair Value
After-Repair Value (ARV) is what your home would be worth fully fixed up and sold at retail. It's the starting point for every cash offer. A buyer estimates ARV by looking at recent sales ("comps") of similar, renovated homes in your neighborhood.
The 70% Rule
The most common formula cash buyers use:
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The formula
Offer = (ARV × 70%) − Repair Costs
Let's break down why:
- ARV × 70% — the buyer needs room for their profit, holding costs (taxes, insurance, utilities while they own it), closing costs on both ends, and the real risk that the project goes sideways.
- − Repair Costs — the estimated cost to bring the home to that after-repair value.
A Real Example
Say renovated homes like yours sell for $300,000 (that's your ARV), and your home needs $50,000 of work:
| Step | Math | Result |
|---|---|---|
| ARV | — | $300,000 |
| × 70% | $300,000 × 0.70 | $210,000 |
| − Repairs | $210,000 − $50,000 | $160,000 offer |
Why It's Not 100% of Market Value
This is the part sellers wrestle with. The discount isn't a buyer being greedy — it's covering real costs: months of carrying the property, tens of thousands in renovation, closing costs twice (buying and re-selling), agent commission on the resale, and the genuine risk that repairs cost more than estimated. The convenience and certainty you get (no repairs, no commission, no showings, fast close) is the trade for that margin.
How to Check If an Offer Is Fair
- Ask for the ARV they used and the comps behind it
- Ask for their repair estimate — does it match reality?
- Get more than one cash offer and compare
- Watch for buyers who won't explain their number — legitimate ones will
Want a no-obligation cash offer on your house?
It takes about 60 seconds to start. No spam, no pressure — just a fair number and a closing date you choose. We buy across Michigan, Tennessee, and Florida.
We'll Show You Our Math
When we make an offer, we walk you through the ARV, the comps, and our repair estimate — so you understand exactly how we got there. No mystery numbers, no pressure. If our offer doesn't work for you, no hard feelings.
A quick note
This article is general information, not legal, tax, or financial advice. Laws vary by state and change over time. For your specific situation, talk to a licensed attorney or CPA in your state. Diamond Home Buyers is a cash home buyer, not a law firm or tax advisor.