How We Calculate Offers: The SOUP Framework

What SOUP™ Is, and Why We Skip the 70% Rule

SOUP stands for Seller Option Underwriting Platform. Both halves of that name are deliberate. It underwrites the house on real numbers, and it exists to give you options, not just a number. It is the method Stephen W. Rockwell has built buying houses in Arizona since 1999, and every offer We Buy Houses Arizona makes runs through it before you ever see a number.

Most cash buyers do not work this way. They use the 70% rule: take 70 percent of a home’s after-repair value, subtract estimated repairs, and quote what is left. It is fast, and speed is the only thing it has going for it. A number pulled from a single percentage is a starting point for negotiation, not a price anyone has confirmed they can close on. That is why offers built on a formula so often move at the closing table. A single percentage was never a firm number to begin with, so there is always room for it to slide after an inspection.

SOUP replaces the single multiplier with five real inputs, each confirmed before the offer is written:

Neighborhood comps. Recently sold homes pulled from the MLS in your specific neighborhood, matched apples to apples to your house: similar year built, square footage, number of stories, pool or no pool, level of upgrades, and the overall condition of the windows, floors, roof, and AC. A metro-wide average or a Zillow estimate cannot do that.

Component-level repair costs. Repairs priced line by line, not guessed by the square foot: roof, HVAC, plumbing, electrical, flooring, kitchen, bathrooms, and finishes. Every offer starts from a full scope of work with a real itemized budget and a schedule.

Holding costs. Property taxes, insurance, utilities, and the carrying time between purchase and resale, all of it real money.

Title and escrow variables. Payoffs, liens, and HOA balances confirmed up front, so nothing surfaces at closing that changes your number.

Your timeline. A seven-day close and a sixty-day close are different math, and both are workable. Your timeline is an input, not an afterthought.

The part the 70% rule misses: what a house is worth depends on what happens to it next. After-repair value is not one fixed number. It depends on how far the renovation goes and what the house becomes. We work in three renovation levels, Good, Better, and Beautiful, up to a full gut when a house needs it, and a property’s price point and location usually point it toward one. End use matters just as much. A full renovation for resale is a different scope, and a different after-repair value, than bringing a house up to standard for a quality rental. We confirm which path a house is on before we build the number, then run those factors through SOUP so the offer lines up with the property’s real future use, not a generic estimate.

This is exactly where the 70% rule breaks down. It applies one after-repair value to every house, as if finish level, condition, and end use did not change what the home is worth once the work is done. They change everything, and an offer that ignores them is a guess dressed up as a formula.

So when sellers ask how much a cash buyer will pay for a house, the honest answer is that it depends on those factors, not on a percentage.

The Real Math: The Same House, Priced Two Ways

The fastest way to see the difference is to run one house through both methods. The numbers below are a representative example, not a specific sale, but the math is exactly how each approach works. Before the numbers, here is how the two approaches differ at a glance:

The house. A 1990s single-story in a Mesa neighborhood, about 1,700 square feet, three bedrooms, two baths, with a pool. Sound structure, but dated: original kitchen and baths, an aging roof and AC, worn flooring throughout. Comparable remodeled homes nearby, matched on age, size, and features, have recently sold around $500,000. That is the after-repair value, the number the house is worth once the work is done and it is competing with those remodeled comps.

The repairs, priced line by line. This house is going to a full resale-grade renovation. Instead of multiplying square footage by a flat per-foot rate, We Buy Houses Arizona prices every component from a real scope of work:

That total is not a round number, because it was not a guess. It is a real budget with a real schedule behind it, priced item by item before the offer is ever written. And to make the comparison below fair, it is the exact same repair figure we hand to the 70% rule. Same house, same work, same $98,095. The only thing that changes is the method.

Why the guess is the problem, and why it lands on you. Most cash buyers never build a sheet like this. They eyeball the house and estimate repairs in their head. Across thousands of offers reviewed since 1999, the pattern is consistent: on a house whose real budget is near $98,000, a quick guess lands nowhere close, usually around $70,000 or around $120,000. And here is the part sellers miss. A wrong repair number hurts you no matter which way it misses.

Guess high, and that inflated figure becomes the excuse for a lower offer. A common shortcut is to price the whole renovation at a flat rate per square foot by finish level, then tack the big-ticket items like roof and AC on top of that. On a house like this it can push the “repair” number well past $120,000, and the higher that number climbs, the lower the offer to you falls. The overestimate is not an accident; it is leverage.

Guess low, and the danger is hidden, which makes it worse. A $70,000 estimate produces an offer that looks generous enough to sign, but it cannot survive real costs. A wholesaler is not the end buyer of your house; someone else is, and that buyer eventually prices the work for real. When it turns out closer to $100,000, the deal no longer pencils at the price you were promised. Weeks later you are back at the table being asked to come down, or the deal quietly dies. Either way you have lost the time you could not afford to lose.

The number only holds if it was counted, not guessed. That is the whole reason we price every component before we write the offer.

Path one: the 70% rule.

That is the whole calculation. The 70% rule bakes a flat 30% cut off the top to cover repairs, holding, resale costs, risk, and profit all at once, in one blunt number. It is quick, but that blunt cushion is doing the work a real analysis should do.

Path two: SOUP. SOUP starts from the same ARV and the same itemized repairs, then accounts for the actual carrying costs over the roughly five months of renovation and resale, the real closing and resale commissions, and a fair margin for doing the work. Because those real costs come in under the 70% rule’s blunt 30% cushion, and because we renovate and resell the home ourselves rather than pricing in layers of middleman margin, there is room to pay you more:

Same house. Same repairs. Same ARV. $23,095 more in your pocket, because the number was built from real costs instead of a shortcut. And because every input was confirmed before the offer was written, that $275,000 is a figure we have verified we can close on, in writing, not an opening bid that erodes at the table.

That is the entire argument for doing the math the hard way. A formula gives you a number fast. SOUP gives you a number that is both higher and real.

SOUP Gives You Options, Not Just a Number

The “Option” in Seller Option Underwriting Platform is not filler. Once SOUP has analyzed your house closely enough to know what it is worth and what it could become, that same analysis can shape a deal more than one way. So instead of a single take-it-or-leave-it figure, you usually get a few paths, laid out side by side, and you choose.

One path might be the fastest possible close, cash in hand in about a week. Another might trade a little speed for a stronger price, or set closing on a date months out because that is what your move actually requires. Another might pair the sale with our Soft Landing™ program, so you stay in the home for a short time after closing at no cost while you get your next step in order. Different sellers need different things, and the point of laying the options out is that the right one is yours to pick, not ours to assign.

And sometimes the honest option is not selling to us at all. If SOUP shows that listing your house on the open market would genuinely put more money in your pocket, and your situation gives you the time to do it, we will tell you so, and explain why. That is a real recommendation, not a courtesy, and it is written into our Seller Bill of Rights.

But telling you to list only helps if you know who should list it. One of the most common and most costly mistakes sellers make is hiring an agent they happen to know, a relative, a neighbor’s friend, someone from church, who may have sold only a handful of houses and rarely works in your area. The wrong agent can cost you far more than a commission. Since 1999 we have worked alongside a lot of agents, and we know which ones are the real thing. When listing is genuinely your best move, we will point you to one of our Vetted Agents: full-time professionals, typically with 20 or more years in the business or 500-plus closings, who are highly skilled and treat people right. You still choose, but you start from a short A-list of agents we would trust with our own family’s sale, not a name pulled from a search you have no way to judge.

Most cash buyers run one model. They buy houses one way, for one purpose, and every house that comes through the door gets forced into that single mold whether it fits or not. The offer serves the buyer’s need, and the seller is handed one number and a deadline. SOUP was built to do the reverse: analyze the house precisely, then map the realistic exit strategies, walk you through the pros and cons of each, and let you make an informed decision with the full picture in front of you.

That is also why SOUP holds up across very different situations. A looming foreclosure date, an inherited house two states away, a rental you are tired of managing, a home that needs far more work than you want to put in, each one changes which options make sense, and SOUP is built to weigh them rather than ignore them. The inputs are the same. What changes is which path wins, and that is the part you decide.

Want to see the full side-by-side of cash versus listing versus an iBuyer? We lay out all three honestly, including the row where another path beats us.