The Real Math Behind "We Buy Houses" Offers

You've seen the signs. Bandit signs on telephone poles. Postcards in your mailbox. Facebook ads promising "cash in 7 days, any condition."

But here's what those "we buy houses" companies won't tell you: their entire business model depends on you not understanding the math.

Today, I'm going to show you exactly how these offers are calculated, where your equity actually goes, and why there's a better path most sellers never hear about.

The Formula Every Cash Buyer Uses

Whether it's a local wholesaler or a hedge fund, nearly every cash buyer uses some version of this formula:

Let's break that down:

ARV (After Repair Value): What your home could sell for in perfect condition

70%: The industry-standard discount to "leave room for profit"

Repairs: Their estimate of what it'll cost to fix up

Their Profit: What they need to make the deal worth their time

You just "lost" $120,000 in equity. But where did it actually go?

Following the Money: Where Your $120K Disappears

That spread between your home's value and your offer doesn't vanish—it gets carved up by multiple parties.

The Uncomfortable Truth

Increasingly, it's institutional investors backed by Wall Street capital scooping up these deals. Their business model depends on information asymmetry. They know the math. They're counting on you not knowing it.

That's why you'll never see a "we buy houses" company show you a breakdown like the one above. Transparency is bad for their margins.

The Third Path: Novation Partnerships

Most sellers think they have two options: sell cheap fast, or list with an agent and wait. There's a third path: a novation partnership.

Instead of buying your house at a steep discount, we partner with you. We handle repairs, marketing, negotiations, and closing—while you retain ownership until the final sale. When the property sells at full market value, we split the upside.

Why Don't More Companies Offer This?

Simple: it's harder. Novation deals require more coordination, more transparency, and more trust. Most operators want quick transactions where the seller doesn't ask questions.

We take the opposite approach. We show you every number. Every cost. Every scenario.

Common Questions

What if my house needs major repairs?

Major repairs actually make novation partnerships MORE valuable. Traditional cash buyers use worst-case repair estimates to justify lowball offers. In a partnership, we handle the repairs and market your home at full value.

How long does a novation partnership take?

Most novation partnerships close within 60-90 days. While longer than a 7-day cash close, the additional time typically nets sellers $40,000-$70,000 more.

What's the catch?

No catch—just trade-offs. You wait slightly longer to close in exchange for significantly more money. We're transparent about every cost because our model only works when sellers trust the process.

How is this different from listing with an agent?

With an agent, you handle repairs, showings, and uncertainty yourself—and still pay 5-6% commission. In a novation partnership, we take over the entire process. You get full-price benefits without the hassle.

What happens if the house doesn't sell?

We don't enter partnerships on properties we can't sell. Before signing anything, we provide a detailed market analysis. Our incentives are aligned: we only profit when you profit.