How Cash Buyers Calculate Offers in St. Louis

The offer is not random. Every cash buyer -- from a local wholesaler to a national "We Buy Houses" brand -- uses a version of the same formula. Understanding it tells you exactly where the number came from and gives you a basis for evaluating whether it is reasonable or not.

The Standard Formula

The industry standard calculation is:

On a home with a $250,000 ARV and $30,000 in estimated repairs, the formula produces: ($250,000 x 0.70) - $30,000 = $145,000.

If that same home would sell for $210,000 as-is on the MLS, the seller just accepted $65,000 less than market. The formula is designed to work for the investor -- not the seller.

The ARV Anchor Problem

ARV is what the home would sell for if it were fully renovated. Investors use this as the starting point rather than the as-is value. This is the first compression point.

For a home in average condition, the as-is market value and the ARV can be very different numbers. A St. Louis brick bungalow worth $185,000 as-is might have an ARV of $230,000 fully updated. The investor calculates 70% of $230,000 ($161,000) rather than 70% of $185,000 ($129,500) -- and then subtracts their repair estimates from there.

Whether they use ARV or as-is value as the starting point makes a significant difference to the final offer, and most sellers do not know which number is being used.

How Repair Estimates Get Inflated

This is the second compression point. Investors have strong incentive to overstate repair costs because every dollar added to the repair estimate reduces the offer by one dollar.

Common inflation patterns I see in St. Louis:

• Roof replacement cited on a roof with 8 years of life remaining. An investor citing $14,000 for a roof that is not due for replacement is adding a cost that you would not actually pay before selling on the MLS.
• Full HVAC system cited when only the AC condenser needs replacement. The difference between a full system ($10,000+) and a single condenser replacement ($4,000) is $6,000 that comes directly off your offer.
• Contractor-level cosmetic costs cited for work buyers would handle themselves. Carpet replacement cited at $8,000 when a typical buyer would budget $3,000 to $4,000 to do it themselves after closing.
• Vague aggregate estimates. "General repairs and updates: $25,000" with no itemization is not a repair estimate -- it is a padding mechanism. Always ask for a line-item breakdown.

What Else Gets Built Into the Offer

Beyond the 30% spread and repair costs, investors also factor in:

• Holding costs: Property taxes, insurance, utilities, and loan interest for the 3 to 6 months it takes to renovate and resell. Typically $3,000 to $8,000 depending on the property.
• Transaction costs: Closing costs on both the purchase and the resale. Two sets of title fees, two sets of closing costs.
• Profit margin: The investor needs to make money. Most institutional buyers target a $30,000 to $60,000 profit on a St. Louis renovation project. That margin is baked in before they call you.

What to Do With This Information

When you receive a cash offer, ask for the line-item repair estimates and the ARV figure they used. Then compare both to reality:

• Is the ARV they used higher than what your home would actually sell for as-is? If so, the 70% calculation is working against you from the wrong starting number.
• Are the repair estimates reasonable, or are they citing full replacements on systems that still have useful life?
• What would it actually cost to list the home, sell it in 30 to 45 days, and net after commissions and closing costs?

The Cash Offer Decoder was built to walk through exactly this analysis. Enter the offer, the property details, and the investor's repair claims. The tool shows what the investor is making and what you would net on the open market instead.

Decode Your Cash Offer

Enter the offer details and the investor's repair claims. See exactly how the number was built -- and what you would net listing on the MLS instead.

Open Cash Offer Decoder →

How to Counter a Cash Offer in St. Louis

You do not have to accept the first number. Cash buyers expect negotiation -- they build room into their offers. Here is how to approach it:

1. Request a line-item repair breakdown. Ask them to show you exactly what repairs they factored in and what each one costs. Unitemized "repair" totals of $25,000 to $40,000 are negotiating tools, not contractor estimates.
2. Get independent repair estimates. Take the investor's list to one or two local contractors. If their $20,000 repair estimate is actually $10,000 of real work, you have documentation to counter with a $10,000 adjustment.
3. Know the ARV they used. Ask directly what After Repair Value they used in their calculation. If they used $280,000 as ARV on a home that would sell for $320,000 fully updated, the baseline of their math is wrong.
4. Have your MLS alternative ready. The most effective counter to a low cash offer is a credible alternative. A signed listing agreement or a comparative market analysis from a St. Louis agent showing a realistic list price changes the negotiation entirely.

iBuyers vs. Wholesalers in St. Louis

Not all cash buyers operate the same way. Understanding who you are dealing with matters:

• Wholesalers typically write contracts and assign them to investors before closing. They rarely close on homes themselves. They typically offer the lowest prices because their margin comes from the spread between what they pay you and what they sell the contract for.
• Local fix-and-flip investors buy, renovate, and resell. Their offers are constrained by their renovation budget and required profit margin, but they close on what they buy. More reliable than wholesalers but still significantly below market.
• National iBuyers (Opendoor, Offerpad if active in your market) use algorithm-based pricing. Their offers are more consistent and transparent than local wholesalers but still carry a significant discount to MLS value.