Selling my house to a cash buyer – what do I need to know?

Selling a house to a cash buyer can be a great alternative to selling via the open market.

Moving house is notoriously one of the most stressful things you will do in your lifetime. In fact, many homeowners voted it even more stressful than a divorce.

The average person buys and sells just three properties in their lifetime. It’s no wonder the process feels unfamiliar and stressful for many people going through it.

man on phone selling house to cash buyer

Most homeowners think they have little choice but to sell through an estate agent, but that isn’t necessarily the case.

Over the last twenty years, we have seen huge growth in the cash home buying industry. Born out of the property part-exchange service offered by many new build property developers, cash home buying companies use their own cash funds to purchase your property directly from you. Because they don’t rely on mortgages or investors, a genuine cash house buyer can provide a guaranteed sale and complete on a date of your choice. A sale on the open market takes an average of 5-7 months, but can take longer if you struggle to find a buyer or are part of a property chain. With a genuine cash home buying company, you can sell your property in as little as a week.

So, what’s the catch?

There are a few important thing to know if you’re considering selling your house to a cash home buying company. These top tips will help you ensure it’s the right route for you and help you find a reputable company.

Familiarise yourself with the cash home buying industry

Before you start approaching individual companies, it’s important that you familiarise yourself with the business model for the industry. This will help you to decide whether it an appropriate route for you.

Any genuine company will be honest and upfront about the level of offer they’re able to make for your property. Instead of charging a fee for the service, a genuine company will deduct their costs from the offer they make. These costs include higher level stamp duty, legal fees and staffing costs.

You can expect any genuine cash home buying company to pay around 80-85% of market value for your property. In exchange, you’ll get a quick, guaranteed and hassle-free house sale on a date of your choice.

It won’t work for everyone, so you need to be realistic about whether you can make it work financially. It can be tempting to be lured in by companies who make you an offer that is closer to market value, but it’s important to note that those companies are almost certainly not genuine.

Because of the costs incurred, it’s not possible for a genuine company to pay more than 85% of market value. Any offer above 85% should be a red flag and we would strongly encourage you to walk away.

When selling to a cash property buyer, make sure the company you’re dealing with is a reputable one

Unfortunately, despite several efforts from some of the industry’s more reputable companies, the cash home buying industry remains unregulated.  For this reason, it is vital that you thoroughly research any company you consider using.

Whilst being members of an industry body does not guarantee they’re a reputable company, it is a positive sign. You should certainly be cautious of any company that isn’t a member of any professional organisations. Organisations to look out for include the NAPB (National Association of Property Buyers) and The Property Ombudsman.

Another way to research any companies you’re interested in using is to read customer reviews. Reviews are a great way to get a feel for a company and the service they offer. Do beware though, some companies have been known to post fake reviews. Look out for a large number of different reviews posted in a short time, or reviews that sound similar. Any genuine company is likely to have a range of different reviews, spread across a significant amount of time.

If you want a quick or guaranteed sale, make sure the company uses its own cash funds 

Many companies will claim to be able to buy your house. Unfortunately, few of them have the cash available to be able to offer any level of guarantee.

The majority of companies will either be brokers or companies that rely on finance from investors or mortgages. Relying on investors or mortgages means these companies are unable to offer any guarantee regarding price or speed. A sale to these companies is unlikely to be any quicker than a sale on the open market. They will still pay less than market value though, so they offer no benefit. If you are not sure that the company you’re dealing with has its own cash funds, you’re better off selling your property via the traditional route and getting in touch with a local estate agent.

The best way to assess whether a company has its own cash funds to purchase your property is to look at their accounts on the Companies House website.

The company’s accounts can provide a great deal of information

A company’s accounts can offer a great deal of information about how their business works.

Keeping in mind that the average UK house price is currently around £280,000, you would expect any genuine cash property buying company to have an annual turnover of £4million-plus and a current balance of at least £1million. Smaller figures would indicate that the company is not buying any volume of properties directly. This suggests they are operating as a property broker.

Companies House will also be able to provide other information, including the names of the company directors. It will also tell you how long the company has been operating and whether the directors are connected to other companies. If the company is associated with others, it’s advisable to look for reviews under each company name. This will give you a better picture of how the company operates.

Ask questions – it will tell you a lot about the company!

The final tip is to ask lots of questions. How the company responds to questions will tell you a lot about the type of company they are. Do they welcome you asking questions about the cash home buying industry and how their company works? Are they forthcoming with information about their company accounts and how many properties they have bought in the last year? Are their answers detailed or vague?  

Genuine cash home buying companies offer a valuable service. They can take all of the stress and uncertainty out of a property sale. However, there are many imposters in the industry, so it is important that you know who you are dealing with. Many salespeople will be persuasive with what they say. Ensure you’re armed with facts about the company’s accounts and have thoroughly researched customer reviews before approaching a company for a cash offer.

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Author:

Danny Luke

Danny Luke

As Managing Director, Danny is responsible for the overall performance of Quick Move Now and provides strategic guidance and direction to all its employees. Danny is committed to making Quick Move Now the leading and most trusted home buying company in the UK.
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