Understanding the math
Why cash buyers pay less than market value — and what you actually get in return.
The gap between a cash offer and retail market value is real. We're not going to pretend it isn't. A cash offer on a Raleigh home needing moderate work will typically land between 55–72% of what that home would sell for fully renovated. The question isn't whether the gap exists — it's whether what you're trading it for is worth it to you.
Here's what drives the gap, in plain language:
The 70% rule — where it comes from
The "70% of ARV" figure isn't arbitrary. It emerged from decades of real estate investing practice as the margin that allows an investor to cover all costs and earn a reasonable return. Here's what that 30% margin actually pays for:
Where the 30% investor margin goes — $400K ARV Raleigh home
Renovation cost (moderate work)
Contractor estimate
$45,000
Carrying costs (mortgage, taxes, insurance, utilities during reno)
~$2,200/mo × 4 months
$8,800
Resale transaction costs (agent fees, closing on exit)
~6% of $400K
$24,000
Market risk buffer (price drops, extended hold)
Contingency reserve
$15,000
Investor profit (return on capital deployed)
$400K − $45K − costs
$27,200
Total investor costs + profit
$120,000 (~30%)
The offer to you ($243,000 in this example) covers none of these costs. You walk away with $243,000 certain, in 21 days or fewer, without doing a single repair. Jay takes on everything above that line — the risk, the work, the carrying costs, and the uncertainty of the resale market.
When the math actually works in your favor
The net proceeds comparison in the calculator above shows the real picture. A cash offer of $243,000 vs. a listed price of $320,000 looks like a $77,000 gap. But when you subtract what it actually costs to list — commission, closing costs, repairs, and carrying costs — the gap narrows considerably. Here's the full comparison for the $320K as-is / $400K ARV example:
| Cost item |
Sell to Jay (cash) |
List with an agent |
| Sale / offer price |
$243,000 |
$320,000 |
| Agent commission (6%) |
✓ $0 |
− $19,200 |
| Seller closing costs (2%) |
✓ $0 — Jay pays all closing costs |
− $6,400 |
| Repairs before listing |
✓ $0 — buy as-is |
− $22,500 (half of repair cost) |
| Carrying costs (45 days) |
✓ $0 — closes in 21 days |
− $3,200 (~$2,100/mo × 1.5 mo) |
| Deal fall-through risk |
✓ None — cash, no lender |
✗ ~8% of contracts fall through |
| Time to close |
✓ 7–21 days |
60–120 days total |
| Estimated net to seller |
$243,000 |
$269,700 |
In this example, listing nets roughly $27,000 more — a real difference. But that assumes a clean sale: the buyer's financing doesn't fall through, no major repair demands come after inspection, and the market doesn't soften in the 3–4 months it takes to close. For a seller in a stable situation with time, listing is usually the better financial choice. For a seller with urgency, condition challenges, or complexity — the math often tells a different story.
What Jay actually looks at during a walkthrough
The offer calculation starts with a property walkthrough, but the most important number — ARV — comes from comparable sales data. Jay pulls closed sales from the Wake County Register of Deeds, not an algorithm. He's looking for homes within 0.5 miles, similar square footage, similar age, and similar lot size that sold fully renovated in the last 90 days.
The repair estimate is built from actual Raleigh contractor pricing: he's not using national averages or a software estimate. A roof replacement in Wake County runs $10,000–$22,000 depending on size and material. An HVAC system replacement is $8,000–$18,000. A full kitchen renovation is $25,000–$55,000. Jay uses real bids, not percentages, which is why the math is defensible when he shows it to you.
One thing we always say: If you disagree with Jay's ARV estimate, tell him. He'll show you the comps he used and walk you through the analysis. If you have information he doesn't — a recent appraisal, a neighbor's recent sale, knowledge of upcoming neighborhood changes — that changes the conversation. Jay has adjusted offers after sellers provided data he didn't have.