How do we make a profit?

There are no costs or fees for using our service, so you may be wondering where we make our money... If so, this article is for you.

3
minute read

As a seller, choosing to sell to us assures you of a simple, certain and convenient house sale. The only drawback is that we buy your home from you at a price less than its full value.

This is effectively where we then make our money – once we’ve bought your property we step into your shoes as the new seller.

Once we've bought your home from your, we deal with the long, complicated, stressful and drawn-out sale you were hoping to avoid

So in essence, we now deal with the long, complicated, stressful and drawn-out sale you were hoping to avoid! By us going through the lengthy process and selling the house for it’s full value the company makes a profit.

Costs we incur

Unfortunately for us though, as with any business the difference between what we buy your home for and what we sell it for isn’t all profit. We have lots of costs to consider too, which come off our bottom line and unfortunately prevent us from being able to offer drastically higher prices.

As an example, the costs we incur on property bought for£100,000 include:

3x Legal Fees - £3,000 inc VAT

We cover your legal fees for selling, and we also pay our solicitors for the purchase and the sale – so we pay 3 sets of legal fees in total. Because our service is underpinned by being quick, efficient, and completing on a date to suit you, we have to pay relatively high legal fees to be sure of a quality service.

1x Estate Agent fee - £1,000 inc VAT

Once we’ve bought the property from you we don’t hold onto it – we resell it, and will generally incur around£1,000 fee in estate agency costs.

Stamp Duty - £3,000

Property investment firms pay 3%more in stamp duty than any normal buyer – so our stamp duty rate ranges from3% to as high as 5% on higher value properties.

Council Tax, Utilities and Insurance - £940

Unfortunately most councils have removed council tax exemption for empty properties, so even though the house is vacant while we try and resell it, we still pay many months of council tax and utility bills while trying to sell. Our insurance is also more expensive than traditional home insurance due to the home being empty – so we generally pay around £190 per month for these bills, usually for around 5 months while we resell.

Financing - £3,500

We use a buying fund that gives us access to funding at very short notice – so we can be sure to complete in a timeframe to suit our customers. Funding is very expensive though – especially borrowing large sums over short terms, so our financing costs are incredibly high. We pay for the lenders legal team to sign off our solicitor’s work, as well as the lender’s drawdown fees, exit fees, and of course interest rate –which is usually around 1-1.25% per month.

Miscellaneous - £1,000

There are other charges we expect to run in to as well on each purchase, such as property surveys, maintenance, damage repairs, searches, indemnity policies for the solicitors and so on –these generally add up to around £1,000 on each transaction.

Total Costs: £12,440


An example

In other words, if we buy a property from you for £100,000 and resell it for £115,000, the company profit will be in the region of £2,560. Unfortunately not nearly as high as it first seems!

This is why we aim to buy at around 80-85% of the market value and resell at 100%. In this example, that’d mean for a property bought at £100,000 we’d hope to sell for £118,000-£125,000, and make greater profit. (We need to – as there are wages, marketing costs and other business overheads to cover too before the company makes a profit).

We’ve included a diagram showing where the money ends up from a £150,000 property we buy from you for £124,500.

Selling to
Selling via
Estate Agent
Property value (example)
Selling process

£150,000

£150,000

Offer amount
Average number of viewings
Average time to sell

£147,000

£124,500

6-12 months?

0 viewings

21 days

10+ viewings?

Costs incurred
Estate agent fees
Solicitors fees

£3,750

Repairs and redecoration

£1,200

Price reduced after survey

£1,500

Holding costs
Mortgage payments

£2,500

Council tax & utilities
Final amount you receive

£4,000

£2,000

£124,500

£132,050

Dates to suit you

No hassle

No fees

Long waits

Stress

No control

Transparency

Although this is a more detailed explanation than most people thinking about selling their home to us will be interested in, we believe it’s important to be transparent with customers, and that you should know our position and our interests when considering selling your property to us.

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