What a cash home buyer actually is
A cash home buyer is any individual or company that buys real estate without needing a mortgage. The cash usually comes from one of three places: the buyer's own capital, a private lender or hard money lender lined up in advance, or a line of credit. The seller does not need to care which one applies. From your side, the result is the same: no loan contingency, no underwriting delay, no appraisal requirement that can kill the deal at the last minute.
The category covers a wide range of buyers. iBuyers like Opendoor and Offerpad are publicly traded companies with algorithmic pricing and big balance sheets. Franchise networks like HomeVestors are about 1,100 independent operators using a shared brand. Local investors are the wholesalers and flippers in your specific market, often working out of a small office or from their truck. All of them are cash buyers. The differences are in pricing, process, and who they serve.
Where the money actually comes from
Most local cash buyers do not have a vault of money sitting around. They use a mix of their own capital and lender money. A typical Midwest flipper might have $200,000 of personal capital and a line of credit with a local hard money lender that funds 80 percent of the purchase plus rehab. The buyer brings 20 percent to closing, the lender brings the rest, and they pay it back when the house resells.
iBuyers fund deals from their corporate balance sheet, which is a mix of investor capital, debt financing, and revenue from the homes they have already resold. Their model only works at scale, which is why they limit themselves to specific metros and home types where they can buy and resell efficiently.
Wholesalers are a special case. They put your home under contract for cash but do not actually close on it themselves. They assign that contract to another investor who brings the money. From your side it still looks like a cash sale, but the buyer signing at closing is usually different from the person who came to your house. That is not inherently bad, but it is a thing to know about.
How they price an offer
Every cash buyer is doing some version of the same math: figure out what the house will be worth after repairs, subtract repair cost, subtract holding cost, subtract their target profit, subtract closing costs on both ends. What is left is the offer.
For a local investor on a fixer, the formula usually lands at 65 to 75 percent of after-repair value minus rehab cost. On a $250,000 ARV home that needs $40,000 of work, that math comes to roughly $150,000 to $175,000.
For an iBuyer on a move-in-ready home, the formula starts closer to fair market value and then a service fee gets deducted. On the same $250,000 home if it needs no work, an iBuyer might offer $245,000 minus a 5 percent fee, netting you around $232,000 before any closing costs.
Both models are doing the same thing: pricing in their risk and their margin. The math just lands in different places depending on the home's condition.
What the process looks like from your side
You submit your address and a few details about the home. Within 24 to 48 hours you get a preliminary offer, either by phone or email. If the number works, you schedule a walk-through. For local investors this is usually one visit, sometimes with a contractor. For iBuyers it is a more formal inspection.
After the walk-through, the buyer usually revises the offer if they find something significant. You sign a purchase agreement. The buyer's title company runs title, you sign closing documents, and the money hits your account.
From first contact to wire is typically 7 to 21 days for a local investor, 14 to 60 days for an iBuyer who lets you pick the close date. There is no listing, no showings, no open houses, no appraisal-killed deal, and no buyer financing falling through at the last minute.
When a cash buyer is actually the right call
Cash makes sense when speed, certainty, or condition is the gating factor. If you inherited a house in another state and do not want to manage repairs and showings, cash is the right call. If you are in pre-foreclosure and need to close before a specific date, cash. If the house has serious repair issues that would scare off retail buyers or kill a financed deal, cash.
Cash usually does not make sense if the home is move-in ready, you have 60 to 90 days, and you can tolerate the friction of a traditional listing. In that case a listing will almost always net more, even after agent commission.
The smartest move for most sellers is to get a cash offer alongside an honest agent CMA and look at the net proceeds for both. That is the only way to know which path actually wins for your specific situation.