The investor who mailed you that letter already pulled your public records, estimated your equity, and calculated their maximum offer before you read their name. This page shows you exactly how they did it — so you can evaluate the number they gave you.
Most cash investors use a formula called the 70% rule: they offer no more than 70% of your home's estimated market value (ARV), minus the cost of repairs they estimate they'll need to make. On a $350,000 home needing $30,000 in repairs, that formula produces a maximum offer of $215,000. If a wholesaler is involved, subtract their assignment fee ($10,000–$30,000) on top. That is where the number came from. The question is whether that number is fair given what you would net from other options.
ARV stands for After Repair Value — what your property is worth after renovation, based on comparable sales of similar homes in your area that have already been updated or repaired.
The investor knows your home's market value. They calculated it before contacting you. Your job is to verify that number independently — not take their estimate at face value.
This is the formula. Every legitimate cash investor uses a version of it.
The Formula
Max Offer = (ARV × 0.70) − Estimated Repair Costs
Worked Example
What Happens Next — The Investor's Exit Math
Your Numbers vs. the Market
The investor's margin is not wrong — they're taking real risk and providing genuine liquidity. The problem is when that math is hidden from you and you don't know you had other options. An informed seller who chooses a cash offer is making a tradeoff. An uninformed seller is leaving money on the table.
Many of the letters you receive don't come from the investor who will actually buy your home. They come from wholesalers — middlemen who contract to buy properties and then sell those contracts to actual buyers for a fee.
Wholesaler Formula on the Same $350,000 Home
The simplest diagnostic: ask whoever contacted you, "Are you the actual buyer, or will you be assigning this contract to another investor?" A legitimate wholesaler will answer truthfully. One who evades the question is a red flag.
The "offer expires in 48 hours" framing is a sales tactic, not a real deadline. If this particular investor walks away, another will make a comparable offer within days — because investors buy the same public data lists and mail to the same distressed homeowners.
The urgency is specifically designed to prevent you from doing three things: getting an independent valuation, consulting an attorney or HUD counselor, and getting competing offers. Each of those three actions consistently results in a better outcome for the seller.
One additional protection: under RESPA (12 C.F.R. §1024.41), if you file a complete loss mitigation application with your mortgage servicer, your servicer cannot proceed to foreclosure while it is under review — buying you additional time regardless of any cash buyer's artificial timeline.
Sellers who take these six steps consistently recover more equity from a cash transaction — or discover a better path altogether.
HomeLeafs pulls the same public records data investors use — recorded mortgage balance, county assessor value, comparable sales — and shows you your estimated equity for free. Same information, your side of the table.
Check Your Property Free No account required. Takes under two minutes.The 70% rule is the standard formula cash investors use to calculate their maximum offer. They will pay no more than 70% of your home's After Repair Value (ARV) minus their estimated repair costs. This formula is designed to guarantee the investor a minimum 30% profit margin after repairs, carrying costs, and closing costs are accounted for.
On a $350,000 home needing $30,000 in repairs, the formula produces a maximum offer of $215,000 — regardless of how much equity you have or how long you've owned the property. The rule is not negotiable from the investor's perspective; it is how they protect their return. Which is exactly why you need to know your own math before you respond to any offer.
A cash offer is fair when the discount from market value is proportional to the genuine benefits you're receiving: certainty of closing, speed, no repairs, no showings, and no contingencies. A 10–15% discount from market value might be reasonable for those benefits. A 35–50% discount is not.
To evaluate: get an independent CMA from a licensed agent (free), calculate your net from the cash offer (offer minus payoff), and compare it to your estimated net from a market sale. Then decide whether the difference is worth the convenience the cash buyer offers. Getting at least 3 written offers from different cash buyers in the same week gives you real competition — and competition is the most reliable way to find a fair number.
An assignment fee is the profit a wholesaler collects by contracting to buy your home and then selling that contract to another investor before the closing ever happens. The fee — typically $10,000 to $30,000, sometimes more — is not disclosed as a separate line item in the offer. It comes directly out of the price paid to you.
Here is how it works in practice: the person who mailed you the letter contracts to buy your home for $177,500. They then find an actual fix-and-flip investor willing to pay $197,500 for that contract. The wholesaler pockets $20,000 at closing. You see $177,500. The end buyer sees $197,500. Nobody told you the full picture. The question to ask any buyer upfront: "Are you the actual buyer, or will you be assigning this contract?" A legitimate operator will answer honestly.
Yes — and you should. Cash buyers are not doing you a favor; they are making a business investment and they build in negotiating room. The investor's formula gives them a maximum offer ceiling; the number they present you is typically below that ceiling.
The single most effective negotiating tactic is creating competition. Get multiple written offers from different cash buyers in the same week and let each one know you are collecting offers. When buyers know there is competition, offers move higher — often by $10,000–$30,000 or more on a typical property. You can also negotiate the closing timeline (buyers often will pay more for a longer or more flexible close that suits your schedule). If a buyer tells you the offer expires in 48 hours, remember: that deadline is a sales tactic. If they walk, another investor will send an offer within days.
Last reviewed: May 2026