One of the most common questions we hear from Spokane homeowners is “how did you come up with that number?” It’s a fair question, and the answer isn’t magic or a secret formula. Cash buyers use a fairly standard calculation, and you deserve to see exactly how it works. When you understand the math, you can tell the difference between a fair offer and a lowball, and you can decide whether selling for cash makes sense for your situation.
The Basic Formula
The core calculation almost every legitimate cash buyer uses is some version of this:
After Repair Value (ARV) − Repair Costs − Holding Costs − Selling Costs − Profit Margin = Maximum Allowable Offer
Let’s break each piece down with real Spokane numbers.
1. After Repair Value (ARV)
This is what the house would sell for on the open market after it’s been fully renovated to current standards. We pull comparable sales — typically homes within a half mile, sold in the last 90 days, similar size and style and condition. If your house is a 1,400 square foot ranch in Audubon and three similar fully-renovated ranches sold in the last few months for $385,000, $395,000, and $405,000, the ARV is somewhere around $395,000.
This is not the same as Zillow’s estimate, your tax assessment, or what your neighbor sold for in 2022. It’s a current, like-condition comparable analysis.
2. Repair Costs
What will it cost to get the house from its current condition to the renovated condition that justifies that ARV? This includes:
- Roof replacement or repair
- HVAC, plumbing, electrical updates
- Kitchen and bathroom remodels
- Flooring, paint, trim
- Foundation, drainage, or structural work
- Landscaping and exterior cleanup
- Permits and contingency budget for surprises
A typical full renovation on a 1,400 square foot Spokane home runs anywhere from $35,000 to $75,000 depending on condition. Light cosmetic updates might be $15,000 to $25,000. A full gut on a distressed property can run $100,000 or more.
3. Holding Costs
From the day we buy your house to the day we resell it after renovation, we’re paying:
- Property taxes (proration of the annual bill)
- Insurance (vacant-home policies are pricier than owner-occupied)
- Utilities to keep the property functional during renovation
- Loan interest if any portion is financed
For a typical Spokane project taking four to six months, holding costs usually land between $4,000 and $8,000.
4. Selling Costs
When we resell the renovated property, we pay:
- Real estate agent commissions (5 to 6 percent)
- Closing costs (title, escrow, excise tax) — typically 2 to 3 percent in Washington
- Any concessions to the eventual buyer
For a $395,000 ARV, selling costs run roughly $30,000 to $36,000.
5. Profit Margin
This is the part most sellers don’t want to think about, but it’s real. We’re running a business. We have employees, overhead, marketing costs, and risk. If the market shifts during the renovation, or unexpected repairs come up, that profit margin is our buffer. A typical target margin for a fix-and-flip in Spokane is 10 to 15 percent of the ARV, so $40,000 to $60,000 on a $395,000 project.
A Real Worked Example
Let’s say you own a 1,400 square foot, three-bedroom ranch in Audubon Park. It was your aunt’s home, it’s in original 1970s condition, the roof has another year or two, the furnace is on borrowed time, and the kitchen and bathrooms haven’t been touched since they were built.
Comparable renovated 1,400 sf ranches in Audubon have been selling for $385,000 to $405,000. We’ll use $395,000 as the ARV.
- ARV: $395,000
- Repair costs (kitchen, baths, flooring, paint, roof, HVAC, landscaping): $55,000
- Holding costs (5 months): $6,000
- Selling costs (agent + closing): $32,000
- Target profit margin (~12% of ARV): $47,000
Maximum cash offer: $395,000 − $55,000 − $6,000 − $32,000 − $47,000 = $255,000
“But Zillow Says My House Is Worth $310,000”
Zillow’s estimate is based on automated comparables that don’t account for condition. Their $310,000 estimate assumes your house is in roughly average condition for the neighborhood. If yours needs a new roof, new furnace, and full kitchen and bathroom updates, the real as-is retail value is much lower — usually closer to what a cash buyer is offering, minus a few percent.
If you listed that same house retail, you might get $275,000 to $290,000 if a buyer was willing to take on the project, but you’d be netting that minus agent commissions ($16,000+), repairs the inspector flags ($5,000 to $15,000 in concessions), and 60 to 120 days of holding costs while you wait. The net often lands within $5,000 to $15,000 of what a cash buyer would pay — without the months of hassle.
What Affects the Number Most
- Location. Same house in the South Hill versus East Central can have ARVs $100,000 apart, which moves the whole equation.
- Condition. Every $1 of repair cost reduces the offer by about $1, roughly speaking.
- Comparable sales. If recent comps are soft, ARV drops, and the offer drops with it.
- Market direction. In a softening market we build in more conservative ARV assumptions because we have to project what the house will sell for months from now, not today.
Why We’re Showing You the Math
Because trust matters and because the math isn’t complicated. The companies that try to hide the math are usually the ones lowballing. When we send you an offer, we’ll walk through every line — what comps we used, what we budgeted for repairs, what our margin is. If the numbers don’t make sense for you, that’s fine. You can list it, you can wait, you can get other offers. We’d rather you make the right decision than the fast one.
If you want to see what the math looks like on your specific Spokane property, call us at (509) 720-8429 or request a free offer online. We’ll send you a real number within 24 hours, with the math laid out, no obligation, no pressure.