The truth behind companies that claim to be cash house buyers and scams to be aware of…
There are hundreds of companies claiming that they can buy your house quickly for cash, but the reality is there are only three genuine property buying companies in the whole of the UK.
So how do you know whether you are dealing with a genuine home buying company? Here are some easy tips to identify the good from the bad.
Never sign a contract! A genuine cash home buyer would never ask you to sign anything until exchange
A genuine professional home buyer will never tie you into a contract.
A lot of companies that do not have their own cash funds will use a type of contract called an ‘option agreement’ to prevent you from selling your house to anyone else whilst they try to find a buyer for your property. Option agreements are very one-sided contracts – you will be legally tied to the company for a set number of months, but the company will not be legally obliged to buy your house! If you’re looking for a quick and certain house sale, an option agreement should never be signed.
The only paperwork you should need to sign when selling your house to a genuine cash home buyer will be when you exchange contracts (just like with any traditional house sale).
How much will a genuine cash home buyer pay?
A genuine home buying company will always buy at a discount. The business model is simple – buy houses at a discounted rate and sell back on the open market at full value. This model doesn’t work for sellers hoping to achieve full market value, but it does work well for those who feel the speed and certainty of the sale are more important than the price they achieve.
Any professional home buyer who says that they buy at more than 85 percent of market value is unlikely to be a genuine cash home buyer. Find out more about why a genuine cash home buyer must buy at a discount here.
A genuine professional property buyer will have a balance sheet to prove they buy a lot of houses
You should expect a genuine cash home buying company to have an annual turnover in excess of £4 million and a current balance of at least £1 million to be in a position to make instant purchases.
The average UK property currently costs around £250,000. This means that any genuine professional home buyer, claiming to buy multiple properties each year, should have a balance sheet of several million.
Limited and public companies are required to file their financial information with Companies House. This information is available to the public by searching on the Companies House website.
Any credible house buying company should also be willing to display their financial information on their website. Alarm bells should be ringing if a company is unwilling to share their accounts with you upon request.
Never pay any fees!
Avoid any company that claims to be a genuine cash home buyer that tries to charge you a fee at any stage of the buying process.
A genuine buyer will purchase your property at a discounted rate, in exchange for a fast, reliable and hassle-free house sale.
They should also absorb any legal costs associated with the house sale, such as surveys, Energy Performance Certificates (EPCs) and solicitors’ fees.