Why Cash Offers Are Lower for Homes That Need Work

By David Pannell

David Pannell is the Managing Broker and founder of Cities Real Estate, a forward-thinking brokerage based in Fort Worth, Texas. A licensed Realtor since 2005 and a broker since 2010, David is known for his expertise in helping families sell homes quickly, especially those navigating the complexities of probate and inherited property.

If you’re thinking about selling a house that needs work, those “instant” online values from Zillow, Redfin, or Realtor.com can set you up for frustration. Today, I’ll explain why investor cash offers often come in lower than what you expected, and why that doesn’t automatically mean you’re being lowballed. It’s an inside look at how the numbers are built when a property isn’t clean, updated, or ready for a typical mortgage buyer.

At the core, investors calculate value very differently. Instead of starting with “What could it sell for fully renovated?” they ask, “What will it cost to get there?” I’ll be walking you through those costs in a clear, structured way.

First come the upfront items: clean-out crews, dumpsters, permits, insulation, roofing, foundation allowances, HVAC servicing, and basic electrical and lighting updates.

Then come the high-impact renovations: kitchens, appliances, bathrooms, flooring, paint, windows, and curb appeal.

Finally, it covers the expenses most sellers never factor in: financing fees, insurance during the remodel, closing costs on both purchase and resale, holding costs, potential HOA expenses, and resale commissions. All of it adds up quickly, and investors must leave room for profit to justify the risk and time involved.

A cash offer reflects total project cost, risk, and required return, not just the home’s after-repair value. When sellers compare an as-is property to fully renovated comps, the numbers will never align. Understanding the full cost structure helps you evaluate offers based on net outcome, not just top-line expectations.

If you’re considering selling a property as-is, use this breakdown as your reality check before you accept, counter, or reject an offer. Compare your home’s condition to the comps you’re using, estimate the true cost to reach “retail,” and decide whether speed, certainty, or top-dollar is your priority.

And if you want a clearer number, click the link to schedule a strategy session, call (817) 767-0020, or email david@citiesrealestate.com. Let’s have a walk-through of the costs and options so you can choose the path that makes the most sense.