An investor will likely pay significantly less than the market value of a house. Most investors base their offer on the after-repair value (ARV) of the home, which is the estimated value after renovations. Typically, an investor will offer about 65% to 70% of the ARV minus estimated renovation costs and holding expenses to ensure a profit margin. This means if the ARV of the house is $300,000 and it requires $75,000 in repairs, an investor might offer around $210,000 to $240,000. Several factors influence this offer, including your home's location, current condition, local market demand, renovation costs, and expected resale price after repairs.
Key factors influencing investor offers:
- After-repair value (ARV) of the property
- Estimated renovation and repair costs
- Holding costs like short-term loans, insurance, and maintenance during repair
- Location and desirability of the neighborhood
- Local real estate market conditions and demand
- Investor’s required profit margin, often around 25% equity on resale
How to estimate what an investor will pay:
- Calculate your home's current market value
- Estimate repair costs needed to bring the property to market standards
- Determine the ARV (current value plus renovation costs)
- Expect offers around 65–70% of the ARV minus repair and holding costs
Selling to an investor can be faster and simpler, especially if the home needs significant repairs or if a quick sale is needed. However, offers are generally below what the home would sell for on the open market through traditional listing methods.
If an exact estimate is needed, a professional home appraisal or consulting with local real estate investors or agents is recommended for accuracy based on specific property details and market conditions.
