Buying a house from a company can offer a slick and speedy process, but there are also some things you should be aware of. This guide will cover the benefits and any risks, and help you consider whether it’s the right route for you.
Buying a house from a company – what do you need to know?
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Who is the seller?
The first thing to ask is who the seller is. It’s also important to understand the circumstances of the sale.
Some possibilities might be:
- A property developer selling a house they’ve refurbished
- A landlord selling a vacant buy-to-let
- A property buying company selling a home they’ve recently purchased
Why might a property buying company be selling a property?
Property buying companies offer homeowners a quick, guaranteed property sale in a wide range of circumstances. Once the company owns the property, they will resell it on the open market via an estate agent.
These are some of the circumstances that might result in a homeowner choosing to sell to a property buying company:
Inheriting a property can feel like a big responsibility, especially if you don’t live nearby. For this reason, it’s common for people who inherit a property to opt for a quick cash sale from a property buying company.
Most new build developers will offer a part-exchange service. This allows them to effectively ‘trade in’ their existing property for a new home. The company will then re-sell the part-exchanged property on the open market.
On average, it currently takes around 5-7 months to sell a property on the open market. It can take significantly longer if you’re part of a property chain. A quick sale company offers a much faster alternative for those who can’t afford to wait it out.
Unfortunately, around 1 in 3 property sales fall through before completion. Property chains make sales considerably more vulnerable. Many homeowners choose to sell to a property buying company to eliminate the risk of chain break or because they’ve already, through no fault of their own, had a property sale fall through.
Many relocation packages will include the services of an assisted move or home buying company. Those who are relocating are working to tight and non-negotiable timescales. This means they need to know their property sale is guaranteed and can complete on a date of their choice.
Unfortunately, some homeowners will be in the position where they need to consider using a property buying company to avoid repossession. Although this only makes up a small percentage of the properties bought by property buying companies, it does provide a valuable service to those who want to take control of their financial situation and avoid the long-term repercussions of a repossession order.
Some landlords will choose to sell their properties to a property buying company rather than taking the risks associated with hanging around on the open market and having to deal with the expense of owning a vacant property.
How do you buy a house from a company (UK)?
In many ways, buying a house from a company will be very similar to buying a house from any other property owner. You will buy the property through an estate agent, as normal, and still need a conveyancing solicitor.
The real difference with buying a property from a company is likely to be how quickly the sale can complete. A successful property buying company may have bought and sold thousands of properties over a significant number of years. This is likely to result in a highly structured sale – the company will have a tried and tested system that works. The benefit of this should be a quick and smooth purchase, but it may mean that the company is limited in how flexible they’re able to be.
Step 1: Find a property you want to buy
Step 2: Speak to your mortgage lender or financial advisor and ensure the property is affordable. If you are relying on a mortgage, it’s advisable to get an agreement in principle before making an offer.
Step 3: Make an offer, ensuring you communicate your current circumstances and why you’re a strong choice as a buyer. A company will be focused on a quick and straightforward sale, and recouping their costs, so both the level of offer and your personal circumstances will be key to getting your offer accepted.
Step 4: A company will likely use solicitors used to being proactive and working to tight deadlines. They will expect your chosen solicitor to do the same. If you don’t already have a conveyancing solicitor lined up, the company might have some recommendations for independent solicitors that they know to be proactive. It’s important to note that any solicitor you appoint should be working exclusively in your interest. Ensure this is the case before you instruct your chosen solicitor.
Step 5: As part of the conveyancing process, you will need to get property searches carried out. If the company have recently purchased the property themselves, it’s worth asking whether they have valid search reports that you can purchase from them. This will speed up the sale significantly.
Step 6: Once any mortgage offer is in, searches have been reported on and any enquiries have been satisfied, property contracts will be drawn up and signed.
Step 7: If you’re happy to proceed, contracts will be exchanged and any deposit will be paid across to the seller. At this point the purchase becomes legally binding.
Step 8: On the pre-agreed date, the sale will complete and the property will become yours.
What are the benefits of buying a house from a company?
There are several benefits to buying a house from a company, including:
Buying from a company means you’re more likely to be dealing with a serious, committed seller. Unfortunately, around 1 in 3 property sales currently fall through before completion, many of them due to chain issues. Any company selling a property is going to be chain-free, making your purchase much more secure.
If you’re buying a house from a company, you’re likely to be dealing with people who have sold hundreds, if not thousands, of properties. This should offer you a level of confidence that they know what they’re doing and will be able to resolve almost any issue or delay that comes up.
If you’re buying a house from a company, you’re likely to be allocated a dedicated sales progressor from within the company. Having someone overseeing the transaction and proactively progressing it should increase both the speed and security of your purchase.
Being chain-free and proactively progressed by the company means your purchase is likely to be able to complete significantly more quickly than a standard property sale.
If a property has recently been purchased, there may be the possibility of being able to buy the property searches from the company. With some local authorities taking more than 8 weeks to return property searches, this will speed up the purchase and avoid frustrating delays.
Are there any risks if you buy a house from a company?
There aren’t really risks associated with buying a house from a company, in fact, your purchase is likely to be much more secure than purchasing from a member of the public. There are, however, a couple of things to be aware of.
It’s not necessarily a risk, but it’s important to note that a company is likely to be very proactive and will expect anyone buying a property from them to be the same. A company will have a financial need to cover their costs and will also be keen to select the most reliable buyer that is likely to be able to complete the purchase quickly. If you’re considering buying a house from a company, it’s important to get your finances in place before making a formal offer. There will also be an expectation that you are responsive to enquiries from your solicitor and proactive in ensuring any mortgage is applied for promptly. A property buying company may be unwilling to work with the high-volume conveyancing companies that are often recommended by estate agents and mortgage brokers. These companies are often recommended because the agent or broker receives a financial incentive in the form of a ‘referral fee’, but the high-volume, impersonal nature of their working model means they are often significantly slower and more difficult to work with than high-street conveyancing firms.
If the company bought the property as part of a chain break, part exchange, relocation or quick sale service, they may not have physically seen the property themselves. Instead, they may have relied on estate agents and surveyors to assess and value the property. For this reason, it’s really important that you inspect the property thoroughly and communicate well with the company. If you’re unsure about what is or isn’t included in the sale, make sure you gain clarification.
Questions to ask before buying a house from a company
There are a few questions you should ask yourself before you buy a house from a company.
- How quickly does the company want the sale to complete? Am I willing and able to work to those timescales?
- Am I happy to be proactive in following up with the estate agent, solicitor and any mortgage lender to ensure there are no unnecessary delays?
- Am I happy that I know who I’m buying from and that they are a trusted company?
- Am I happy to accept that the company may not have visited the property in person, and that this will mean the property will be ‘sold as seen’?
Is buying a house from a company a good idea?
There are lots of benefits to buying a house from a company, as long as you’re in a position to move quickly and be proactive in progressing the sale.
A company will have a different approach to a normal homeowner. This can offer benefits like speed, security, and a simple, chain-free sale. It will also, however, mean that they have targets to hit in terms of completion dates, and they will choose a buyer who can progress the sale in a timely manner, whilst also ensuring they recoup their costs.
Top tips if you’re considering buying a house from a company
If you’re considering buying a house from a company, we’ve put together the following tips.
If you’re considering buying a property from a company, it will be important that you’re able to move quickly. To do this, you’ll need to be proactive with your finances and the sale of any existing property. If you need a mortgage, ensure you have an agreement in principle in place before making an offer and be ready to submit your formal mortgage application as soon as you receive the memorandum of sale .
As mentioned above, when you buy a house from a company, it will be ‘sold as seen’. The company may not have seen the property in person, and instead may have relied on reports from estate agents and surveyors. It’s therefore important for you to inspect the property carefully and ask questions about any aspects you’re unsure of. This should include any loft spaces and sheds.
A company will be realistic about the fact that challenges and unpreventable delays are common in the process of buying and selling properties. What they will want to see is that you’re proactive in trying to resolve any issues and that you communicate well.
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