STL Home Journey
George Kindler
Seller education for St. Louis homeowners
Most cash offers make more sense once you understand the math behind them. That does not mean you will like the number. It means you can see why the buyer landed there, where the deductions came from, and whether the tradeoff is worth it.
Before you accept the number, run it through the Cash Offer Decoder. And compare your full options at Cash Offers in St. Louis, Decoded.
A traditional buyer often thinks, can I see myself living here? An investor usually thinks, what can this property be worth after repairs, and what do I need to pay now for the project to make sense? That means the offer often starts with a future value, not the current condition. The future value is commonly called ARV, or after-repair value. It is the estimated price the home might sell for after the right repairs and updates are complete. From there, the investor subtracts costs, risk, and profit.
ARV is not the same as today's as-is value. It is the investor's estimate of the resale value after improvements. In St. Louis, ARV depends heavily on neighborhood, school district, layout, lot, basement condition, updates, and buyer demand. A clean ranch in South County, a city brick home with character, a Florissant rental, and a dated suburban two-story can all have different ARV logic even if the current condition looks similar. ARV is also not a promise. It is an estimate.
After ARV, investors usually subtract several buckets. Repairs may include roof, HVAC, plumbing, electrical, flooring, kitchens, baths, paint, landscaping, foundation concerns, sewer lateral issues, basement water, occupancy issues, or code-related work. Holding costs are the expenses of owning the property during the project: taxes, insurance, utilities, lawn care, financing costs, and time. Resale costs cover commissions, closing costs, buyer concessions, and marketing. Risk margin covers the things that might go wrong. Profit margin is the reason the investor is doing the deal.
Some investors estimate a maximum offer by taking a percentage of ARV and subtracting repairs. For example, they might start around 70 percent of ARV, then subtract repair costs. This is not a law. It is a rough investor shortcut. In some markets or property types, buyers may pay more. In riskier projects, they may pay less. The key point for sellers: a formula built for investor profit is not the same thing as a seller's best possible net.
Repair deductions can be a real estimate, a conservative cushion, or a negotiation tool. Some buyers walk the house carefully and price the work in detail. Others use broad categories. Ask: What repair items are included? Are those repairs required to close, or part of the buyer's resale plan? Is the buyer using contractor bids or a rough estimate? Could the home sell as-is without all of those repairs? Is the repair number being used to justify a lower offer?
St. Louis investors often pay close attention to repairs that can change the resale plan or scare off financed buyers. Sewer lateral concerns can matter because they may be expensive and hard to evaluate without a scope. Basement seepage or foundation movement can affect buyer confidence quickly. Old electric panels, older HVAC, roof age, plaster damage, and deferred exterior maintenance can all become negotiation points. In some municipalities, occupancy or code requirements can also shape the buyer's math.
Investor math asks, can I make money on this project? Seller math asks, what will I net, and what stress am I avoiding? Those are different questions. To compare them, look at the cash offer next to an as-is MLS estimate and a traditional listing estimate. Then subtract likely costs and timeline risk from each path.
After investor deductions, repair claims, and MLS net comparison.
Open Cash Offer Decoder →What is ARV?
ARV means after-repair value. It is the estimated resale price after repairs and improvements are complete.
Do investors always use the 70 percent rule?
No. Some use it as a shortcut, but actual offers depend on property condition, financing costs, competition, risk, and resale expectations.
Why do investors subtract repairs from my offer?
Because repairs affect what the buyer must spend before renting or reselling the house. The question is whether the repair estimate is realistic and whether the open market would value the house differently.
Can a cash offer still be fair if it is below market value?
Yes, if the seller is intentionally trading some price for speed, certainty, privacy, or relief from repairs. The key is knowing the size of that tradeoff.
Should I get another opinion before accepting?
Usually, yes. A second opinion can help you compare the cash offer to an as-is MLS path and a traditional listing path.
Grew up in South St. Louis, lived in Dogtown for 6 years, now in South County. You'll find us at White Flag Church on Sundays. This is my city, and I know it well.