There is no percentage. The figure you have probably read, that investors pay around seventy percent of value, is a national rule of thumb that does not describe this state well, and applying it to a Massachusetts property will mislead you in one direction or the other depending on where the house is.
What cash home buyers in Massachusetts actually do is arithmetic, and it is arithmetic you can run yourself. Here it is.
The calculation, in full
Every legitimate offer is built the same way, working backwards from what the property will eventually sell for.
Start with the after repair value: what the house is worth once it has been brought up to a condition the open market will pay full price for. That is not what it is worth today and not what you paid.
Subtract the cost of the repairs, at trade rates rather than retail, because a buyer with their own crews pays less than you would for the same work.
Subtract the holding costs: property tax, insurance, heating, utilities and financing for however many months the work and the resale take.
Subtract the cost of selling it again: commission, the deeds excise levied under Chapter 64D at roughly $4.56 per $1,000 of the sale price, attorney fees and closing costs.
Subtract a margin, because the buyer is taking the risk that any of the above is wrong.
What is left is the offer. That is the whole method.
Why the percentage rule breaks in Massachusetts
Here is the part national articles cannot capture, because it depends on local price levels.
Repair costs do not scale with property value. A roof, a heating system and an electrical upgrade cost broadly similar amounts whether the house is in Springfield or Burlington. But the after repair value in those two places differs by a factor of three.
So the same $60,000 of work is a fifth of the value of a $300,000 property and well under a tenth of the value of a $900,000 one. Run the arithmetic and the offer on the higher-value property lands at a much higher percentage of its value than the offer on the lower-value one, even though the buyer applied identical logic to both.
A high resale value pulls the offer up with it. That is why a seller in a strong eastern Massachusetts market who has read that investors pay seventy percent is often pleasantly surprised, and a seller in a weaker market who expects the same figure is often disappointed.
What moves what cash home buyers in Massachusetts will pay
Condition, by a distance. The repair estimate is the largest and most variable input. Two identical houses on the same street can be tens of thousands apart on offer because one has a functioning heating system and the other does not.
Whether it is financeable. A property a lender would happily finance has an open market alternative, which sets a floor under what a cash buyer needs to offer to be competitive. A property no lender will touch does not.
Occupancy and tenancies. Leases run with the property in Massachusetts, and security deposits transfer with accrued interest under Chapter 186, Section 15B. A tenanted property is priced as an income asset, and incomplete deposit records reduce the offer because the buyer has to assume the worst.
Anything unpermitted. This is a title issue rather than a condition issue and it changes the deal, not just the price.
What should not move the number
Your urgency should not change the offer. A buyer who reduces their number because they learn you have a deadline is telling you something about how they operate.
Neither should the walkthrough, much. A serious buyer’s initial estimate should survive the visit with only minor adjustment for something genuinely unexpected. Our guide to what makes a fair cash offer covers how to test whether a number was built honestly.
The comparison that actually matters
Sellers usually compare a cash offer against what they think the house is worth. That is the wrong denominator.
Compare it against the realistic net from a listing: the price it would eventually achieve, minus commission, minus the repairs a lender will require before financing it, minus the deeds excise, minus several months of carrying costs, adjusted for the risk that the first deal collapses and you start again with days on market attached.
Sometimes the listing still wins comfortably, and where the property is sound and financeable it usually does. Sometimes the gap is a few thousand dollars of difference for months of work and real risk. You cannot know which without running both numbers.
Since this article is about the number, here is ours without the hedging. Our offers usually land between 60 and 70% of after-repair value, before transaction costs, financing and holding costs, and profit. The range moves with the work: closer to 55 to 60% on a heavy rehab, and up toward 70 to 75% on a clean cosmetic property where the repairs are predictable. If a buyer will not tell you roughly where their offer sits against after repair value, that itself is informative.
How to check an offer yourself
Ask the buyer for their after repair value and their repair estimate, and ask them to walk you through the subtraction. A buyer who calculated honestly will do this without difficulty. A buyer who cannot either did not calculate it or would rather you did not see it.
Then sanity check the after repair value against recent sales of properly renovated comparable properties in your town, and the repair estimate against a contractor’s quote. If both inputs look right, the output is probably right too.
You can request a cash offer on your property and ask for exactly that breakdown. The willingness to show the arithmetic is a better signal than the number itself.
Homeowners We’ve Helped
Boston Investors
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After 94 days on the market, two buyers backed out over the roof and septic. We were tired of dealing with it. The cash offer came without asking us to make the repairs, and we closed in 21 days. Once we looked at the actual numbers, it made much more sense than continuing to list. The whole process was simple and we’re very happy with how it worked out.
