How cash buyers actually determine your home's value (the 5-line equation).
The single biggest myth about cash offers is that buyers pull numbers out of thin air. They don't. Every honest Tampa Bay cash buyer is running the same five-line equation in their head, with the same five inputs. The reason offers feel arbitrary is because nobody shows their work. So we will.
By the end of this you'll be able to estimate any cash offer on any house in Pinellas, Hillsborough, or Pasco within about 4 percent.
The 5-line equation
Offer = After-Repair Value − Repair Cost − Holding Cost − Resale Closing Cost − Target Margin
That's it. Five inputs. One number out. Now let's break each line down.
Line 1: After-Repair Value (ARV)
ARV is what your home would sell for after a full retail-grade renovation. Not what it's worth today. Not what Zillow says. What it would sell for, listed on the MLS, fully fixed up, in the same neighborhood.
Buyers calculate ARV by pulling 3 to 6 "comparable sales" (comps) that meet four tests:
- Sold in the last 90 days
- Within a half-mile radius
- Within 15 percent of your square footage
- Renovated to retail condition
Average the comps' sale price per square foot, multiply by your square footage, and you've got ARV. You can do this yourself on Redfin in about 10 minutes.
Line 2: Repair Cost
What the buyer needs to spend to bring the house up to ARV condition. The walk-through is where this number gets built. Roof, HVAC, kitchen, bathrooms, flooring, paint, electrical, plumbing, structural, exterior. Each one has a dollar figure tied to local Tampa Bay contractor pricing.
Rough Pinellas/Hillsborough costs as of 2026:
- Full roof replacement: $14K to $22K
- HVAC system: $7K to $12K
- Kitchen rehab (mid-tier): $18K to $35K
- Bathroom rehab: $8K to $14K each
- Flooring (1,500 sf): $9K to $15K
- Interior paint + drywall: $5K to $9K
A "light cosmetic" rehab on a 1,400 sf home runs $25K to $40K. A "full gut" runs $80K to $130K.
Line 3: Holding Cost
The expense of owning the property during the renovation period. Property tax, insurance, utilities, lawn maintenance, and (most importantly) the interest on the buyer's hard-money loan. Most flips in Tampa Bay take 4 to 6 months from purchase to resale.
For a $300K loan at 11 percent interest over 5 months, holding cost runs $13K to $16K all-in.
Line 4: Resale Closing Cost
What the buyer will pay when they re-list and sell the renovated house. Agent commissions (5 to 6 percent), title fees, doc stamps, and seller concessions. Typically 7 to 9 percent of the eventual ARV.
Line 5: Target Margin
The buyer's profit. Usually 8 to 12 percent of ARV. This is what allows the business to keep operating: pay the team, fund the next deal, eat the inevitable deal that goes upside down. Anyone who claims they don't take a margin is either lying or about to be out of business.
Worked example: a Clearwater 2/2 condo
Real numbers from a deal we did last quarter. Two-bedroom, two-bath condo in Clearwater, 1,150 square feet, 1985 build. Tile floor was cracked. Kitchen was original. Bathrooms had pink tile from the Reagan administration. Roof was newer (HOA replaced it in 2022). HVAC was 4 years old.
| Line item | Amount | How we got there |
|---|---|---|
| After-Repair Value (ARV) | $285,000 | Three renovated 2/2s in same building sold for $278K-$292K in last 60 days |
| Repair cost | − $42,000 | Kitchen $22K, two baths $14K, paint/floor $6K. Roof and HVAC clean. |
| Holding cost (5 months) | − $11,000 | HOA dues + taxes + utilities + hard-money interest |
| Resale closing costs | − $20,000 | ~7% of ARV (agent + title + concessions) |
| Target margin | − $28,500 | 10% of ARV |
| Cash offer to seller | $183,500 | ~64% of ARV in this scenario |
The seller's first reaction was "$183K? That's lowball. The unit next door sold for $290K." Yes, it did. After a $42K kitchen and bath renovation. The unit next door, in your unit's current condition, would sell for around $215K to a retail buyer who's willing to do their own work, after 90 days on market, paying their own agent commission.
Net to seller, retail path: ~$200K after agent and time. Net to seller, cash: $183K in 14 days.
The seller took the cash because she had relocated to North Carolina and didn't want to fly back for showings. Different seller, different decision. Same math.
Why the same equation produces different offers
Two cash buyers can plug different numbers into the same equation and arrive 5 to 10 percent apart. The variance comes from:
- ARV interpretation. Buyer A picks the lowest comp, Buyer B picks the average.
- Repair scope. Buyer A plans a full gut, Buyer B plans cosmetic only. The market will take either, but the budget changes.
- Cost of capital. A buyer with their own funds has lower holding costs than one borrowing from a hard-money lender.
- Target margin. Some buyers run a 7 percent margin and high volume. Others run 14 percent and low volume.
The takeaway: getting two or three offers gives you a real triangulation. One offer is a data point. Three is a market.
Once you have the offer, you need to know how to act on it. Here's how to verify a cash offer is real before you negotiate, and the complete process for taking it from offer to wire. Once the number lands, the bigger question is what you actually keep. Where your equity goes when you sell walks through the line items on closing day.
The bottom line
The 5-line equation isn't a secret. It's just one of those things buyers don't proactively show you because most sellers don't ask. Now that you know the inputs, you can do two things you couldn't before. One, run a rough number on your own house in 15 minutes using Redfin and a contractor friend. Two, when an offer comes in, ask the buyer to walk through their math line by line. If they can, you're dealing with a real buyer. If they can't, you're not.
Frequently asked questions
How do cash buyers determine the value of my home?
The 5-line equation: After-Repair Value − Repairs − Holding Costs − Resale Costs − Target Margin. Same structure for every reputable Tampa Bay buyer. The variance comes from how aggressive each buyer is on each input.
How is After-Repair Value calculated?
From recent comparable sales of fully renovated homes within a half-mile radius and similar square footage, sold in the last 90 days. Average the per-square-foot price and multiply by your square footage.
How accurate is a cash buyer's repair estimate?
Within 10 to 15 percent of actual cost in our experience. Buyers who do this full-time have estimating accuracy that beats most homeowners' contractor quotes. Buyers who don't do this full-time get it wrong both ways.
Can I get a cash offer based on Zillow's Zestimate?
No serious buyer uses Zestimate. It's a starting point only. Zillow's algorithm doesn't account for local condition, recent comps, or anything specific to Tampa Bay. Real buyers pull live MLS comps.
What's the typical percentage of ARV a cash buyer offers?
60 to 80 percent. Move-in ready homes get 75 to 85 percent. Major rehab homes get 55 to 70 percent. The rest of the gap is the rehab budget the buyer is taking on.