How we arrive at a number
For a house, the starting point is the price once it is fully repaired. We subtract what the repairs cost and then a margin for being wrong about the price or the repairs. No algorithm and no trade secret: that is how the number is built.
- What it is worth repaired. Not the Shirley median of $549,990 on its own, but what houses like yours on your street actually closed at recently.
- What the work costs. Roof, boiler, electric, the kitchen and bath. In Shirley the stock is largely ranch and cape cod, and on houses that age the mechanicals are usually the expensive part rather than the cosmetics.
- How long we will hold it. The median Shirley house goes under contract in about 43 days once it is showable, then waits 45 to 60 days more on the buyer's lender. Ours has to get to showable first, and we carry taxes and insurance across the whole of it.
- What we are wrong about. Every renovation turns up something nobody could see on the walk-through. We build that risk into the price, and it explains a good part of why cash offers come in below retail.
Where our margin actually comes from
Plainly, because buyers are often vague here: we run millions of dollars of construction a year. At that volume we pay contractor prices for materials and keep steady crews working twelve months a year, so a given renovation costs us roughly half of what a homeowner pays for the same job.
That is where our margin is. It is also why fixing the house up yourself first rarely pays off. You would be paying retail for the work and counting on the sale price to cover it, and it usually does not. We earn our money on the construction side, not on the price we pay you.
If the figure does not work, say so; we would rather know than try to talk you round. We will look at what is going on and tell you honestly which options make sense, including the ones without us. Listing with an agent is the better route for plenty of sellers, and we will tell you if it is yours.
Why the number sits below retail
It is worth being precise about this rather than leaving it as an impression. The gap between what a renovated house on your street fetches and what we pay is not a margin taken out of your pocket. It is four specific costs, and every one of them would otherwise be yours.
The repairs, paid up front rather than at closing. The months of carrying the house while that work runs, with taxes, insurance and utilities running through all of them. The commission and closing costs on the far side. And the risk that opening a wall finds something worse, which on older Shirley stock happens often enough to have a price.
A homeowner paying retail for that work usually cannot recover it in the sale price. We run millions of dollars of construction a year, so the same work costs us in the region of half what you would be quoted, and that difference is what funds the offer.
What the two paths cost in Shirley
Work it against Shirley's own numbers. The median sale here is $549,990. A 5% commission on that is $27,500, and seller closing costs of about 2% add roughly $11,000. Those are costs we can cover on our side. That is $38,499 gone before anyone counts the repairs it took to get the house listable.
There are two waits in a listed sale and people usually only count the first. In Shirley the median house takes about 43 days to go from listed to a signed contract. Then it waits again, typically 45 to 60 days, while the buyer's lender orders an appraisal and underwrites the loan. Call it 88 to 103 days from sign to keys, assuming nothing goes wrong.
The part worth understanding is what a signed contract actually guarantees, which is less than most sellers assume. A retail buyer with a mortgage contingency can walk away right up to the end. If they do not qualify, if the appraisal comes in under the price, if they change their mind and let the financing lapse. A share of deals die exactly there, after months of waiting, and the house goes back on the market with time on it. We are not borrowing anything, so there is no lender to satisfy, no appraisal to come in low and no contingency to exercise.
| Listing with an agent | Selling to us | |
|---|---|---|
| Sale price | $549,990 (Shirley median) | Our written offer |
| Commission | −$27,500 | None |
| Seller closing costs | −$11,000 | We can cover them |
| Repairs before listing | Out of pocket | None |
| Cleanout | Yours | Ours |
| Showings | Until it sells | One visit |
| Listed to signed contract | 43 days (Shirley median, once listable) | 24 hours to a written offer |
| Contract to closing | 45 to 60 days (waiting on the buyer's lender) | A date you choose |
| Total wait | 88 to 103 days if nothing falls through | Yours to set |
| Can the buyer walk? | Yes (mortgage contingency runs to the end) | No financing to fall through |
| Before repairs and carrying | $511,491 | The number we put in writing |
The listing column assumes a 5% commission and seller closing costs of about 2%. Both vary. We have not subtracted repairs or the cost of carrying the house while it sits, because those depend on the property. A house in good condition listed with a good agent can absolutely beat a cash offer, and we will say so if that is your situation.
What we do not deduct
Just as important as what comes out of the number is what does not. We do not charge a fee for the visit, a fee for the offer, or a commission of any kind. We do not ask you to credit us for repairs we are going to make anyway, and we do not hold back a sum against something an inspection might find, because there is no inspection contingency.
Seller closing costs of about 2%, around $11,000 on a $549,990 sale, are costs we can cover on our side. The figure we put in writing is the figure on the closing statement.
What you do not pay
These are the costs of putting a house on the market through an agent. None of them apply when you sell to us.
- Agent commission
- $27,500 at 5% of the Shirley median none
- Seller closing costs
- About $11,000 on a $549,990 sale. We can cover these. none
- Repairs to make it listable
- The work it needs to show well, out of your pocket first none
- Cleanout and removal
- Paid per load, before a single buyer walks through none
- Carrying costs while it waits
- Taxes, insurance and utilities while you spend 88 to 103 days finding a buyer and waiting for their loan none
Getting a second opinion on our number
We would rather you did. Take the written offer to a local agent and ask for a market analysis, which most will do at no charge. Ask them two things: what the house would fetch renovated, and what it would fetch listed in its current condition today.
If those numbers, minus the commission, minus the repairs, minus the months of carrying it, beat ours, then list it. That is the right answer and we will say so ourselves if we think it is where you are. An offer that only looks good while you are not allowed to check it is not one we want to be making.
Common questions
Will you pay market value?
No, and anyone who says they will is not telling you the truth. We pay below what a renovated house fetches, because we are buying it unrenovated and carrying it. What we are honest about is how far below, and why.
Why not just list it?
Often you should. A house in decent condition in Shirley listed with a good agent will usually beat our number even after the $27,500 commission. The arithmetic changes when the house needs work, when you cannot wait 88 to 103 days, or when a buyer's mortgage falling through would be a disaster for you.
Can I get the offer in writing?
Yes, always, and within 24 hours. Not a range, not a "we can probably do around". A figure you can take to an attorney or an agent for a second opinion.
Do you lower the price later?
No. What we put in writing is what we close at.
Do you publish a formula?
No, and be careful with anyone who does. A published equation applied to a house nobody has walked is a marketing device, not a valuation. What we will do is explain every input that goes into your number and answer questions about any of them.
What if I think the number is too low?
Tell us why, and show us what you are comparing it to. Sometimes the comparison is a renovated house and the gap is the work, which we will walk you through. Sometimes you know something about the property we did not, and the number moves. Either way, take it to an agent for a second opinion first.