One of the most common questions we hear from homeowners in the Rio Grande Valley is: “How do you come up with your offer?” It’s a fair question — and one we’re happy to answer transparently.
Understanding how cash home buyers calculate offers helps you make an informed decision about whether selling for cash makes sense for your situation.
The Basic Formula Cash Buyers Use
Most cash home buyers — including Sunbelt Cash Offer — use a variation of the following formula to determine their offer:
After Repair Value (ARV) minus Repair Costs minus Holding Costs minus Profit Margin equals the Cash Offer.
Let’s break down each component.
After Repair Value (ARV)
The ARV is what your property would be worth on the open market after it has been fully repaired and updated to current market standards. Cash buyers determine this by looking at recent comparable sales — similar homes in your neighborhood that have sold recently in good condition.
For example, if similar 3-bedroom homes in your area of McAllen have been selling for $160,000 after renovation, that becomes the starting point.
Repair Costs
Cash buyers estimate what it will cost to bring your property up to sellable condition after purchase. This includes everything from cosmetic updates like paint and flooring to major repairs like roof replacement, foundation work, HVAC systems, and plumbing.
The more repairs needed, the lower the offer — because those costs come directly out of what the buyer will net when they resell.
Holding Costs
After purchasing your property, the cash buyer holds it while making repairs and then marketing it for resale. During that time they pay property taxes, insurance, utilities, and financing costs. These holding costs typically run 1 to 2 percent of the property value per month.
On a $160,000 property held for 4 months, holding costs might run $6,000 to $12,000.
Profit Margin
Cash buyers are businesses. They need to make a profit to stay operational and continue buying houses. A typical profit margin in the RGV market ranges from 10 to 15 percent of the ARV.
A Real Example
Here’s how the math might look on a house in Edinburg TX:
ARV — $160,000
Repair costs — $25,000
Holding costs — $8,000
Profit margin — $18,000
Cash offer — approximately $109,000
That offer may seem low compared to the $160,000 ARV. But consider that the seller pays zero in agent commissions ($9,600), zero in closing costs ($3,200), zero in repairs ($25,000), and avoids 3 to 6 months of mortgage payments while waiting for a traditional sale. When all those costs are factored in, the net difference between the cash offer and a traditional sale is often much smaller than it appears.
Is the Offer Negotiable?
At Sunbelt Cash Offer, we are always transparent about how we arrive at our number. If you have information that changes our repair estimate or comparable sales analysis — for example, recent updates to the home we weren’t aware of — we are open to discussing it.
We never pressure you to accept. Take your time, compare your options, and make the decision that’s right for you.
Get Your Free Cash Offer Today
If you want to know exactly what Sunbelt Cash Offer would pay for your RGV home, call us at (956) 884-4441 or fill out the form at sunbeltcashoffer.com. We’ll make you a transparent, no-obligation cash offer within 24 hours and walk you through every number.