Step 1 — after-repair value
What the house would sell for on the open market, fully renovated, today. It comes from recent sales of comparable homes nearby, adjusted for size, age and condition.
This is the number with the most room for honest disagreement, and the one worth challenging if you think a buyer has it wrong. If you have recent comparable sales we've missed, bring them.
Step 2 — repair cost
Estimated first from square footage and scope, then confirmed by walking the property. Scope bands run roughly like this:
- Cosmetic. Paint, flooring, cleaning, fixtures.
- Moderate. The above plus kitchen, bathrooms and some systems.
- Heavy. Roof, HVAC, electrical, plumbing.
- Full gut. Back to the studs, structural work included.
Older houses cost more once the walls are open — cloth wiring, galvanised supply lines, asbestos-containing flooring. A pre-1960 property carries a real premium over a 1990s one for identical scope.
Step 3 — the costs that aren't repairs
These get forgotten and they're substantial. Property taxes and insurance while we own it. Utilities. Loan or capital cost. Then, when it resells, the agent commission and closing costs on that sale too.
In DFW, taxes and insurance alone run roughly 3% of value a year. On a $300,000 house that's about $750 a month, every month, before a single repair is paid for.
Step 4 — margin
We won't pretend this isn't here. It has to cover the deals that go wrong: the foundation that's worse than it looked, the four extra months on market, the buyer whose financing collapses at underwriting.
Then what comes off the top
The offer isn't what you receive. Your mortgage payoff, any liens, back taxes and judgments are settled at closing before you see anything, because a title company won't issue clear title until they're cleared.
Offer minus what's secured against the house equals what you actually walk away with. That second number is the only one that matters.
Our calculator runs all of this and subtracts the debt, which most calculators quietly skip.