Definition
Fix and flip describes a buyer's plan to purchase your property, renovate it significantly, and resell it for a profit within a matter of months. Their offer to you is built backward from the home's estimated after-repair value, subtracting renovation costs, months of holding costs like taxes and insurance, selling expenses, and their required profit margin to arrive at what they can pay today. Understanding this math helps explain why an as-is cash offer often looks lower than an online estimate that assumes your home is in perfect condition. Flip buyers take on real risk: renovation budgets run over, timelines stretch, and the market can shift before they resell. For sellers, the appeal is skipping all of that risk and the months of work entirely, in exchange for a lower price than a fully renovated retail sale would bring. It's a tradeoff between speed and certainty on one side, and maximum price on the other.
Example
A flipper offers Angela $185,000 for her outdated three-bedroom home, planning to spend $60,000 over four months on a full kitchen and bathroom renovation before listing it at $310,000. Angela asks him to walk through his numbers, and he explains the after-repair value estimate, the renovation budget, and his required profit margin so she can see how he arrived at his offer. If the renovation runs over budget or takes longer than expected, that risk belongs entirely to the flipper, not to Angela. Midway through the project, the contractor does in fact find outdated wiring behind a wall that adds another $8,000 to the renovation cost, but that expense is absorbed entirely by the buyer. Angela closes in ten days and never has to deal with contractors, permits, or showings during construction, and she walks away with certainty about her number the day she signed.