The four-step flow
Every cash offer program, regardless of how they market themselves, runs the same four-step loop:
- Valuation. The program assigns your home a value. Sometimes this is done by an independent appraiser; sometimes it's an automated valuation model (AVM) with a human reviewer on top. This number — call it “appraised value” — is the anchor for everything that follows.
- Advance / first close. The program pays you some percentage of that appraised value in cash and takes title (or, in bridge products, takes a lien). The percentage ranges from ~75% (traditional iBuyers) to 100% (HomeLight at the highest tier). You now have cash. The program now owns the problem of selling the home.
- Retail leg. The program lists the home on the open market through a partner agent or in-house team. They want to sell it for more than the appraised value, because the spread between appraised and sale is where they make money.
- Second close / waterfall. When the home sells, the proceeds are distributed. The program takes its fees and carry. Some programs (Cash Offer Plus) return any remaining “overage” above appraised value back to you, net of their cut. Traditional iBuyers keep the overage entirely.
Where does the margin come from?
Programs don't advertise this, but their P&L is a stack of four revenue lines:
- Appraisal haircut. The “appraised value” a program assigns is typically 2–5% below what your home would actually clear on the open market in reasonable condition. That haircut is pure margin for the program.
- Service fee. Explicit, usually 1–5% of sale price. This is what programs point to when asked about fees.
- Listing commission. If the program uses its own partner agent, they capture part of the commission on the retail sale. Even on a 5.5% commission, that's meaningful revenue.
- Carry spread. Programs borrow money at institutional rates (prime + 0.5% in 2026) and charge carry to the seller at higher rates. Over 60–90 days of holding, this adds up.
The “no commission” line
Several programs market themselves as “commission-free.” Technically true: they don't charge you a listing commission. What they charge instead is a program fee that is usually equal to or larger than what the listing commission would have been.
The meaningful question isn't whether you pay a commission. The meaningful question is what percentage of your home's market value you walk away with. Our net proceeds calculator collapses all these line items into one number.
Why the appraisal is the number that matters
Every downstream number — your advance, your fee, your potential overage — is computed as a percentage of the program's appraised value. If a program's appraisal comes in 4% below market, you lose 4% of everything, forever, no matter how good the headline fee looks.
This is why independent programs that subcontract appraisals to third-party appraisers (HomeLight, Zoom Casa) usually produce better seller outcomes than programs that appraise in-house (Opendoor, Offerpad). It's not that in-house programs are dishonest; it's that they have a structural incentive to appraise on the lower end of the valid range, and their appraisers know it.
What a good cash offer looks like
In April 2026, for a home in good condition, a competitive cash offer looks roughly like:
- Appraised value within 2% of the 30-day average of comparable sales in your ZIP
- Advance of 85–100% of appraised at first close
- Program fee of 1–3% of sale price (not appraised value — that's a common bait-and-switch)
- Repair deductions documented line-by-line, not as a flat percentage
- Carry at or below prime + 1% if applicable
- Waterfall share of 85–100% of overage above appraised value
Any program whose terms fall significantly outside this band should be explaining why. Some have good reasons (Homeward's guaranteed floor justifies its higher fee). Some don't.
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