OUR BUSINESS MODEL
Where We Make Our Money
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.
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.
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.
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 from 3% to as high as 5% on higher value properties.
Council Tax, Utilities and Insurance - £940
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. So although we can access the funds very quickly in order to complete in a timeframe to suit you, we pay for it. The costs we incur include paying for the lenders legal team to sign off our solicitor’s work, paying the lender’s drawdown fees, exit fees, and of course paying interest – which is usually around 1-1.25% per month.
Miscallenous - £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
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 a larger profit. (We need to – as there are wages, marketing costs and other business overheads to cover too so we can continue to provide our service).
Transparency & Operating Standards
Although this is a more detailed explanation than many people thinking about selling their home to us may 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. Like any business, we're here to make a profit - but we aim to earn our profits by delivering a valuable service to those customers who it's a fit for.
If you have any further questions, please feel free to contact us directly. And if you're interested in seeing what an offer from us on your home may look like, click one of the Make an Enquiry buttons and enter a few details, then we'll call you and - after taking a bit of information about your property - provide you with an approximate offer calculation.