What a cash offer on a house actually means.

Check the funds and the contract, not just the label

A cash offer generally means the purchase is not contingent on the buyer obtaining a mortgage. Ask for current proof of funds and check who will actually purchase the property. Do not assume the label explains every source of funding or removes every condition.

Inspection, title, appraisal or other contingencies may still appear in the contract. Review the deadlines, cancellation rights, deposit and closing arrangements with the professionals handling your sale. A promised closing date is not proof that the transaction will complete.

How the number is built

A renovation investor may consider the following costs. Other buyers have different plans, so this is a comparison framework, not a universal pricing formula:

1. After-repair value. What the house would sell for on the open market once it is in good condition, based on recent nearby sales.
2. Minus what it needs. Roof, systems, kitchen, bathrooms, anything structural, plus the cost of clearing it out.
3. Minus holding and resale costs. Taxes, insurance, utilities and financing while the work happens, then commission and closing costs when it is resold.
4. Expected margin. An investor may allow for profit and the risk of repairs or market changes. Ask which assumptions are included rather than guessing a standard percentage.

Ask the buyer to explain their price and compare it with recent relevant sales and other written offers. A city-wide value or an online illustration is not a valuation of your home.

Cash offer versus listing with an agent

Listing and cash payment are not opposites: a listed home can receive a cash offer. Compare the available proposals against your priorities, property condition and moving plans.

Commission guidance: National Association of REALTORS®. There is no standard commission required by law.

How to check an offer is fair

• Ask for the comparable sales they priced against, with addresses and dates.
• Ask what repair figure they assumed, and get one contractor to sanity check it.
• Compare more than one written proposal, including a listing estimate if that route interests you.
• Ask whether the buyer intends to close or assign the contract. Have a qualified local professional review assignment terms and applicable requirements before you sign.