A cash offer is a proposal to buy your house without relying on a mortgage approval for the buyer. It is not the same thing as an appraisal, and it is not automatically the best price. A buyer who plans to repair and resell a home needs room for the work, the months of ownership and the risk that the resale price changes. Asking how the buyer arrived at the number is a sensible first step, not an awkward question. Consider a simple hypothetical: if a repaired home could sell for $300,000, the buyer estimates $35,000 of work, $20,000 of ownership and resale expenses, and needs $25,000 for risk and profit, the proposed price might be around $220,000. Those are example figures, not an estimate for your address. Even small changes to a repair budget or expected resale price can move the offer considerably. That is why a buyer should be willing to discuss assumptions, not just quote a percentage of an automated value.
Start with comparable sales
Buyers look at recent sales of similar homes near yours, often called comps. A three-bedroom house on a busy road is not directly comparable to a larger renovated house on a quiet block. Size, layout, lot, school area and the date of the sale all matter. An investor may estimate an after-repair value: what the property might sell for after the needed work is complete. This is an estimate, not a guaranteed future sale price. Ask which properties were used and why they are comparable to yours.
Subtract realistic repair costs
Next comes a budget for the work the buyer expects to do. A walkthrough can reveal visible roof wear, an aging HVAC system, foundation concerns or unfinished bathrooms. Some issues require a licensed contractor's assessment before anyone can price them confidently. Buyers may include a contingency for problems hidden behind walls or under floors. An offer based only on photos can change after an inspection, so ask what information the preliminary number assumes and when the price becomes final. If you have repair quotes or warranty records, share them.
Account for the time between purchase and resale
The buyer may pay property taxes, insurance, utilities, maintenance, financing costs and title charges while owning the house. They may also pay to market and sell it later. The longer the renovation or resale takes, the larger those holding costs may be. A buyer also needs a margin to compensate for the work and risk; that margin is not a mysterious fee charged to you, but it is part of why the offer may be below the price of a finished house. A rough model is expected resale value minus repairs, holding and selling costs, and the buyer's required margin.
Compare net proceeds, not headlines
A direct sale can avoid a listing commission and may avoid seller-funded repairs, but it still has a closing statement. A mortgage payoff, property taxes, judgments or other liens do not disappear because the buyer pays cash. If you list with an agent, ask for a seller net sheet using a realistic selling price, estimated time on market, commissions and possible concessions. Then compare it with the direct offer's written settlement estimate. There is no universal percentage that a traditional sale always costs; the numbers depend on the agreement and the property.
Understand what cash does and does not guarantee
With no buyer mortgage to underwrite, a cash transaction can remove one common reason deals fall through. Title work, ownership checks and payoff statements still take time. An offer is not a completed sale, and a verbal price is not a binding agreement. Ask for proof that the buyer can fund the purchase and read the contract's inspection, cancellation, assignment and closing-date provisions. A title company or closing attorney should explain the funds and paperwork. If a buyer demands an upfront fee merely to make an offer, pause and investigate.
Questions worth asking before you sign
Ask whether the quoted price is conditional on an inspection, who pays standard closing costs, and whether the buyer intends to purchase the property or assign the contract to someone else. Request any promised repair or cleanout terms in writing. Find out what happens if a title issue delays closing and whether you can choose a later move-out date. Compare at least two paths if your schedule allows. A good decision is not just the highest number; it is the amount you will actually receive, on terms you understand and can live with.