How Cash Home Buyers Actually Work (And How to Spot a Legit One)

If you've searched "sell my house fast" lately, you've seen the ads — bandit signs on telephone poles, Google search ads, mailers from "We Buy Houses." Most are legitimate. Some aren't. Here's how the business actually works.

The Math Behind a Cash Offer

Every legitimate cash buyer uses the same formula: After-Repair Value (ARV) minus Repair Cost minus Holding & Selling Costs minus Target Profit = Your Cash Offer.

On a $300K ARV house needing $40K in work, a cash buyer might offer $190K–$210K. That's lower than a perfect MLS sale, but you save the 6% commission ($18K), 60+ days of carrying costs, repair credits, and the risk of buyer financing falling through.

5 Red Flags of a Bad Cash Buyer

• They won't put earnest money down (real buyers wire 1–3% to title)
• They ask you to sign before you see a written offer
• They want to do a "double close" or assign the contract without telling you
• They have no verifiable address, BBB profile, or completed deals
• They pressure you to sign within hours, not days

What a Legit Process Looks Like

You get a written offer within 24 hours. The buyer wires earnest money to a licensed title company. Title runs a clean search, you sign at a notary, and your proceeds are wired the same day. No surprises, no last-minute renegotiation.