One of the most common questions we hear from Scranton homeowners is: "How did you come up with that number?" It's a fair question — and the honest answer is that cash offer math is completely transparent once you understand the formula. This guide breaks down exactly how legitimate cash buyers in Northeast Pennsylvania calculate their offers, so you can evaluate any offer you receive with confidence.
Cash Offer = After-Repair Value (ARV) × [Buyer Margin %] − Estimated Renovation Costs − Holding Costs
In NEPA, typical buyer margins run 65–75% of ARV depending on property type and market conditions.
Step 1: Determining After-Repair Value (ARV)
ARV is the most important number in the equation — it's what your property would sell for if it were fully renovated to market-ready condition. Legitimate buyers calculate ARV the same way appraisers and agents do: by analyzing recently sold comparable properties (comps) in your specific neighborhood within the last 3–6 months.
For a Scranton property, good comps are:
- Same ZIP code or adjacent blocks (Scranton's neighborhoods vary significantly in value)
- Similar bedroom/bathroom count and square footage (within 20%)
- Sold within 6 months
- Similar construction type (brick vs. frame, rowhouse vs. detached)
- Updated to comparable condition (fully renovated comps for a fully renovated ARV)
In Lackawanna County's older urban areas, finding tight comps can be challenging — 1920s brick rowhouses on one block may differ significantly from 1950s bungalows two blocks over. A buyer who can't explain their ARV calculation specifically (citing actual sold properties) is a problem. Ask: "What comps did you use?"
Step 2: Itemized Renovation Estimate
After ARV, the biggest variable is the renovation cost estimate. Legitimate buyers walk through the property and build an itemized repair list. Here's a realistic cost range for common items in the Scranton/NEPA market (2026 pricing from local contractors):
| Repair Item | NEPA Cost Range | Notes |
|---|---|---|
| Roof replacement (1,500–2,000 sq ft) | $8,000–$18,000 | Asphalt shingle; steeper pitches higher |
| Foundation repair (crack injection) | $3,500–$12,000 | Major structural issues: $30K+ |
| Full kitchen renovation | $15,000–$35,000 | Mid-grade materials; NEPA contractor rates |
| Full bathroom renovation | $8,000–$18,000 | Per bathroom |
| Electrical panel update | $3,000–$7,000 | Knob-and-tube rewire: $12,000–$25,000 |
| Plumbing update (partial) | $4,000–$12,000 | Full galvanized replacement: $15,000–$30,000 |
| HVAC replacement | $5,000–$12,000 | Forced air system; boilers higher |
| Windows (full replacement) | $8,000–$20,000 | Depends on count and style |
| Flooring (full house) | $6,000–$15,000 | LVP throughout; hardwood higher |
| Interior paint + trim | $3,000–$8,000 | Professional repaint throughout |
| Mold remediation (moderate) | $2,000–$10,000 | Severe cases: $25,000+ |
Step 3: Holding Costs
Holding costs are what the investor pays while the property is being renovated and relisted. For a typical 90–120 day NEPA renovation project:
- Property taxes: ~$250–$500/month (Lackawanna County rates)
- Insurance (vacant property): ~$150–$300/month
- Utilities (heat, electric during renovation): ~$200–$400/month
- Financing costs (hard money loan, if applicable): 1–2%/month of purchase price
- Total typical holding costs: $4,000–$12,000 for a 3–4 month renovation
Step 4: Investor Profit Margin
The investor's margin is what makes the business viable. Typical NEPA cash buyers target 15–25% of ARV in profit — accounting for deal risk, capital cost, and the overhead of running a renovation business. On a $150,000 ARV home, that's $22,500–$37,500 in required profit. This might feel large, but consider: the investor is assuming all repair risk (cost overruns happen), all market risk (what if values drop during renovation), and providing a service you're paying for with speed and certainty.
Full Example: A Scranton Property Walk-Through
Let's apply this to a real scenario: a 3-bedroom, 1.5-bath home in North Scranton, built 1935, original electrical and plumbing, needs full renovation.
- ARV: Comparable renovated homes in North Scranton sold for $145,000–$155,000. Midpoint ARV: $150,000
- Renovation estimate: Roof ($14,000) + kitchen ($22,000) + 2 bathrooms ($20,000) + electrical upgrade ($6,000) + plumbing ($10,000) + flooring ($8,000) + paint ($5,000) + misc. ($5,000) = $90,000
- Holding costs: 4 months × $2,200/month = $8,800
- Investor margin (20% of ARV): $30,000
- Maximum Allowable Offer (MAO): $150,000 − $90,000 − $8,800 − $30,000 = $21,200
That's a low offer for a reason — this is a property requiring $90,000 in renovation work. If the seller has realistic expectations about the condition, that offer may still be the right path compared to trying to list a property that won't finance and sitting on it for 6 months.
How to Know If Your Offer Is Fair
- Ask the buyer for their comparable sold properties (what ARV they used)
- Ask for an itemized repair estimate (verify the numbers feel reasonable)
- Get 2–3 competing cash offers — if they're all in the same range, you have a market price
- Ask a local realtor for a CMA on the as-is value vs. the renovated value — gives you context
- Run the traditional listing net-proceeds math: after commission, repairs, and carrying costs, what would you actually net?
Curious What Your NEPA Home Would Fetch in Cash?
We'll show you our comp research and explain every number in our offer. Zero obligation.
