Cash offer or list with an agent in Bakersfield? The math, laid out honestly
A cash offer is lower than a listing price. Sometimes it still leaves you with more, and often it does not. Here is how to compare the two for a Kern County house, with a worked example.
We buy houses for cash in Bakersfield and the rest of Kern County, so you might expect this article to tell you a cash offer is always the smart move. It is not. For a house in good condition with an owner who can wait, listing with a good agent usually leaves more money in your pocket. A cash sale wins in a narrower set of situations. This guide shows you how to tell which one you are in.
What a cash offer really is
An investor's offer is built backward from what the house will be worth after it is fixed up. The usual steps are:
- Estimate what the house would sell for after repairs, using recent sales of updated homes nearby.
- Take a percentage of that, often around 70 percent, to cover the investor's costs to buy, hold and resell, plus profit.
- Subtract the cost of repairs.
- What is left is the most the investor can pay.
That is why the same house gets very different offers depending on its condition. Every dollar of repairs comes straight off the price. It is also why you should ask any buyer to show you those three numbers. A buyer who will not explain the math is hiding something in it.
What listing really costs
A listing price is not what you take home. Between the list price and your check there are real costs:
- Agent commissions. These are negotiable and vary, but they are commonly several percent of the sale price.
- Seller closing costs. Escrow, title and transfer taxes.
- Repairs and credits. Most buyers with a loan will ask for repairs after the inspection, or a credit instead.
- Getting it ready. Cleaning, hauling, paint, landscaping, sometimes staging.
- Holding costs. Mortgage payments, taxes, insurance and utilities for every month the house is on the market and in escrow.
- The price cut. The first offer you accept is often below the list price.
None of this is a reason not to list. It is just the full picture.
A worked example
Take a three-bedroom house in east Bakersfield that would be worth $320,000 fully updated. It needs a roof, a new cooling system, flooring and paint: about $45,000 of work.
Option A: list it as-is. In its current shape, say it lists at $255,000 and sells at $245,000 after two months, to a buyer whose lender then requires roof repairs.
| Sale price | $245,000 |
| Commissions and closing costs, about 7% | -$17,150 |
| Roof repair credit required by the lender | -$12,000 |
| Three months of payments, taxes, insurance, utilities | -$6,000 |
| Left before paying off the loan | about $209,850 |
Option B: a cash offer. 70 percent of $320,000 is $224,000. Less $45,000 in repairs is $179,000.
| Sale price | $179,000 |
| Commissions | $0 |
| Repairs | $0 |
| Closing in two weeks, half a month of holding costs | -$1,000 |
| Left before paying off the loan | about $178,000 |
In this example, listing wins by roughly $30,000. The cost is three months and the risk that the buyer's loan falls through over the roof.
These numbers are made up to show the method. Your house will be different, and you should run it with your own figures.
When the cash offer wins anyway
The gap closes, or reverses, when one of these is true:
- A lender will not finance the house. Fire damage, a failed foundation, no working kitchen, unpermitted additions or a recorded substandard notice can rule out most loans. If the only buyers are cash buyers, the listing price drops toward the cash price, and you still pay commission. How code cases affect a sale.
- There is a deadline. A trustee's sale date does not wait for escrow. The foreclosure timeline in Kern County.
- Holding it is expensive. A vacant house with a mortgage, a tax bill and a code case loses money every month.
- You cannot do the prep. An inherited house full of belongings, two hours from where you live, with three heirs who need to agree. Selling a house in probate.
- Certainty matters more than the last dollar. Some sellers will take a known number and a fixed date over a higher number that depends on a stranger's loan approval.
When you should list instead
- The house is clean, sound and financeable.
- You have no deadline and can carry the costs for three or four months.
- You have, or can borrow, the money for basic prep.
- The repairs it needs are small. A few thousand dollars of paint and flooring often returns several times its cost.
If that is you, list it. Interview two or three agents who sell in your part of town and ask each for the last ten sales they closed.
How to compare your own two numbers
- Get a written cash offer that shows the after-repair value, the repair estimate and the percentage used.
- Ask an agent for a net sheet: an estimate of what you would take home at a realistic sale price, after every cost.
- Subtract your holding costs for the months the listing would take.
- Compare the two bottom lines, and decide how much the time and the certainty are worth to you.
Our offer estimator runs the cash side of that math in the open, so you can see how the number is built before you talk to anyone.
What we do
We buy houses across Kern County for cash and put the offer in writing with the math behind it. If listing would clearly leave you with more, we will say so, and you are welcome to use our number as your floor when you talk to agents. To get one, send us the address. There is no charge and no obligation.