Cash house buyers are a relatively new thing in the UK.
They’ve arrived on the back of considerable frustration with estate agents, and a realisation that, in general, it's taking longer and longer to sell a property.
When a cash property buyer delivers, the end result is a fast house sale, and a huge reduction in the stress and strain that surrounds selling your house.
We’re going to take a look at companies that buy houses, how they work, and how to ensure you choose the best cash house buyer to work with.
What are cash house buyers?
Simply put, it’s a company who are in a position to make an immediate offer on your property, and can buy quickly. They're a great option if you want to sell your house fast.
With the rise in wait times to sell a property (the average is now approaching 7 months), cash house buyers are an important part of the property market. They can provide a great solution for sellers who want sell their house for cash, and move on quickly.
In short, going with a cash buyer for your house is very attractive.
Benefits of a cash house buyer
There are a number of benefits to getting a cash offer for your home from a home-buying company, we’ll take them in turn:
- Ideal for difficult circumstances. If a seller has had sudden life changes, such as a bereavement, a divorce, or relocating/emigrating abroad, selling a home could be the thing they want to be taken care of quickly. It can be incredibly challenging to manage life after a divorce for example. If a cash buyer is there to pay for a property quickly, this makes it easier to move on
- There are no fees. This can be a good benefit, because selling a house is often more expensive than people expect.
- A cash house buyer is able to make a quick offer for the property. In some cases we've been able to make formal offers within 24 hours. We can complete on the sale within 2-3 weeks. (Far better than the 6 months or longer that it can often take on the open market).
- Quick turnaround. Back to that timescale thing, it can take months to find a buyer for your property. And weeks or months afterwards to complete the sale to them. Cash home buyers have the funds to make the whole process part of a quick turnaround, making them a great option if you want to sell your house fast.
What to be wary of
Of course, things aren’t always plain sailing when you're exploring "cash for houses" companies, and unfortunately this part of the property industry is still not well-regulated.
This means you may be exposed to a cash house buyer company that is dishonest, unprofessional, or simply out to take advantage of their customers. (You'll be fine if you know what to look out for though - and we'll cover that later).
One of the biggest problems is gazundering. We’ll deal with that one first.
What on earth is gazundering?
Gazundering happens after a sale price has been agreed, but before completion takes place.
What the more unscrupulous cash house buyers can do is suddenly lower their offer during this period.
Well, usually just because they want to. Gazundering is usually something pre-orchestrated. They offered you the high price at first - knowing they'd drop it further on down the line to what they really wanted to pay.
The benefit for them is that you might have just rejected the low offer at the start... But by "stringing you along" for many more weeks, you might be more likely to accept the low price than you would have been at the start.
Illegal? Unfortunately not.
Unethical? Absolutely. But that doesn't stop it happening.
And with regulation of the "cash house buyer" industry still in its infancy there are still companies out there getting away with it.
So gazundering is a dirty tactic companies (and many ordinary buyers on the open market too) use to try and force a seller to take a lower offer.
What happens after you've been gazundered?
Two things can happen here:
- You as the seller can take the lower offer.
- Or you can refuse it, and go back to square one.
It might seem simple like a simple decision, and you might be sure now that you'd reject the lower offer.
But the emotional cost of losing all that time can be significant. It means going back to the start, and waiting all that time again to find another purchaser to buy your house. It could mean your ongoing plans falling through too.
This means it'll often seem more appealing to just go with the lower price.
And if you accept the new, lower offer, that's it. You simply lose that money. But it may make sense for you because you may just want to get the sale over with (because it's so close to the final contracts).
How much money might you lose? Well, it depends how audacious the company was. We've had clients come to us after an unscrupulous company has dropped their offer by tens of thousands of pounds.
Can you protect yourself against Gazundering?
Yes, to an extent.
If you're looking to sell your property to a cash house buyer company, consider taking the following steps to make sure you’re as protected as possible against the practice:
- Take the time to investigate the company. Do they have a full website with contact details, names and faces of the people behind the business, and company registration details at the bottom of each page? Be cautious if not. Read our guide on we buy any house warnings and best practices.
- If the valuation by the company is less than thorough, it's a clear warning sign that things may not be as clear as you want them to be. Ask how the company conducts its valuation. If they're not even properly valuing your home and making offers, it's probably because they know they'll drop it to a really low price later on, where an accurate valuation hardly even matters.
- When they give you an offer, don't jump at it straight away, especially if it seems very high. Don't forget that companies have a lot of costs, and still need to make profit. If they're offering a large amount of money, chances are that it will be lowered at the last minute.
- Is the company a member of The Property Ombudsman (TPO)? The TPO offer rights and protection to both the client and the service provider, and being a member is a quality mark.
- Ask for proof of any recent purchases. Then ask for contact details for the sellers of these homes. It should be seen as perfectly reasonable for you to contact these previous customers to find out how things were and if they were happy with the process. We have great relationships with our past sellers, and they'll happily speak with you and tell you about their experience with us.
- Don't sign a contract. There's no reason to sign a contract with a house-buying company. If they're trying to get you one it's likely to tie you up in knots. They could offer you a price and then sign a contract. But once they reduce your offer, the contract might stop you selling elsewhere for a period of time. They can use this to force you to sell to them if you can't wait out the term of the contract. (With us there are no contracts or tie-ins).
- LOOK AT THEIR REVIEWS. And NOT just the overall score. Dig deeper. Lots of companies write themselves lots of "Excellent" reviews to drown out the reviews from their real customers. Checking cash house buyer reviews before you contact them is crucial. Here's an example:
How much can you get for your property?
Essentially, this is down to the company that is offering to buy your property for cash, or the cash buyers you're dealing with.
That said, it's important to remember that a cash house buyer runs into a lot of costs buying and selling property - and that they need to make a profit afterwards too.
You can expect to see an offer that's somewhere between 15-20% less than the value of your property. (Bear in mind that you'll make many savings to offset the lower price - including saving estate agent fees, legal fees, and other costs you pay while holding your property. Things like council tax, mortgage payments etc)
Having this 15-20% figure in mind is helpful, in a way.
Firstly, it will help you see immediately if you are dealing with an unscrupulous company. A cash house buyer company that is dishonest will most likely offer you the ‘full market value’, or very close to it.
You'll know this isn't right because it doesn't allow the company to even cover their costs, let along make a profit. So why would they be doing it? And why wouldn't they just be going to their local estate agent and offering full market value (or very close to full market value) on every house?
If the offer seems much higher than 80-85% of your home's value, you'll know straight away to query this with them. (Or even to ignore them entirely and look elsewhere).
Secondly, the best cash house buyers will work hard to buy your home from you in days rather than months. This should be reflected in that offer price - you're effectively paying for an outstanding service, and an easy, stress-free home move without the long waits.
Are there any other fees involved?
The whole point of selling your house for cash to a home-buying company is to make things happen quickly.
However, given the discount you're accepting, it's important that you save fees on the process. Because you're already taking a discounted offer, you should expect a good cash buyer for your home to cover your fees - rather than bolt them on afterwards.
With that low offer comes the peace of mind that you don't have to pay anything to the company. They become the owner of the property, and they most likely will be selling it again a few weeks down the line.
So there shouldn't be any fees!
When you think about it, this makes sense. You're not getting the market value because the company has its own costs. A reputable company will charge you nothing, with even the legal fees taken care of within the offer price.
One caveat here.
Don't pay for a valuation
Some companies will charge you for a valuation ... This means you're paying just to give someone the opportunity to make you an offer!
This is not appropriate and you should steer clear of these companies. Sometimes this figure is as much as £1,000!
Once again, a good company will give you a lower offer than the market value, because everything else, including fees, is accommodated through that offer.
So why would one charge for a valuation? Well... Just to make money from you. They can take £500 or £1,000 from you for a valuation, then just make you a ridiculous offer you'd never accept. It's a great way of earning money for them, and you're out-of-pocket by a small fortune.
So never pay for a valuation from a company you've approach to buy your house for cash.
How quickly can cash house buyers purchase the property?
Selling your house for cash to a company is probably a lot quicker than you think.
The majority of good and experienced "cash buyer for house" companies will take the property off your hands within two to three weeks. Sometimes, you may even find companies that can get the whole thing done and dusted in just one week. (The fastest we've purchased a home from a client is just six days).
That includes us by the way - as property cash buyers, if you need a really quick completion let our team know when you first speak with us.
This is why the concept is so attractive to homeowners who want to sell their house quickly.
These companies don't have to rely on acquiring finance through a conventional mortgage. For us, we have a pre-agreed buying facility in place with an institutional lender. This means the cash is there ready as soon as we need to buy a property. It's nothing like waiting on traditional mortgage companies.
Legals & Conveyancing
The other delay in traditional sales comes from the legal side of things.
Solicitors and specialist conveyancers have a lot of paperwork to get through, and the conveyancing process can time consuming and expensive. But the whole process is made quicker with a cash house buyer. For us, this is because we have really great solicitors, who we pay a premium to in order to work through our cases quickly.
Our team are also highly experienced, so we know how to quickly work through any of the common obstacles that crop up - and can otherwise take weeks to sort.
All in all, one of the other benefits of selling to a cash house buyer is that the whole process after you've accepted the offer is a breeze.
Should you sell your home to a cash buyer?
Selling a home is typically stressful and drawn out.
Some sellers have to wait months (sometimes even years) to sell a property, simply because the process can be complicated, and it can take so long to find a buyer. Especially if there's a chain involved.
Selling to a cash buyer takes away all of that stress and strain. As mentioned earlier, a cash buyer is also the perfect solution for anyone who wants to sell their house faster than normal. The only downside is the lower offer, but even that can make sense because there are no fees involved for you and it makes the whole process quicker.
Most people who sell to cash house buyers do it for one simple reason:
They don't want to wait weeks and months to find a buyer or wait for a long housing chain to complete. They simply want things done quickly.
In a housing market that's becoming even more difficult to navigate they know that a cash house sale means someone taking the property off their hands quickly. Leaving them with cash for the next house purchase, or whatever their next plans involve.
It just saves time, effort, stress, and uncertainty.
In addition to all of the stress involved in selling a house, there has been further bad news in the housing market. House prices in the United Kingdom are going up, with the house prices hitting an all time high in the summer of 2020.
This means it's more difficult for people to buy, meaning it takes longer to sell your home.
It's why a cash house buyer may well be the solution for many sellers, especially if their property has been on the market for a long time.
Should I look for cash house buyers near me?
It's not necessarily important. For us, we have independent 3rd parties visit your home to conduct our valuation. This means that buying a home right on our doorstep in beautiful Chester is no different than buying buying a property the other side of the country. We can offer you the same high level of service wherever you are - so don't worry too much about location.
If you’re looking to just move on and sell your house fast (and if you'd welcome less stress, hassle, and uncertainty), we may be the solution you are looking for.
To find out what an offer from Yes Homebuyers would look like, click one of those big blue "Get An Offer" buttons and enter your details, and we look forward to speaking with you.
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