Why you shouldn’t be too hasty selling your house to a company offering to pay cash

If you’re in need of selling your home or property fast and have seen one of those ads from a company saying “we pay cash for your home” stop for a minute and read this first, as there are other options available which may be more suitable for your circumstances.

Selling a property fast and why you might specifically require a quick sale

Everyone’s circumstances are different of course, but there are many reasons why a property owner might be seeking a quick sale. You might be seriously behind on mortgage repayments and not have long before the lender files for eviction. If there’s any equity left in the property after the loan amount you would seriously be risking your chances of salvaging any of the equity remaining in your property by leaving it to the bank to sell on, after all they are only interested in recovering what is owed to them!

Either way, it’s going to be best if you try selling your home for a price you deem suitable right? Even if it’s to one of those companies offering to pay “Below Market Value” for it, otherwise known as BMV.

Another example is you might have seen a property that you have your heart set on but don’t have time to sit around and wait for your home to sell. Or maybe you’ve seen a retirement opportunity that doesn’t come up very often which you just can’t afford to miss out on.

Or maybe you have inherited a property through probate which is nowhere near where you live, you don’t know the area and you just want to get it sold fast. There’s so many reasons why a property may require a quick sale, I’m sure you get the gist. There seems to be ads popping up everywhere across social media and google from companies offering to pay cash for your home at a reduced price in return for a guaranteed quick sale, especially during times of any economic crisis like we’ve had recently with the COVID 19 / Corona Virus.

The question is…. Should you consider this as a viable option of selling your home?

Well – first let’s look at all your selling options:

Option 1:      Put your property on the open market with a local estate agent.

Sure: Timescale? Likely a minimum of 3 months

If you know the area well then I recommend not to just go with the agent offering the cheapest fee! This doesn’t always pay off and could leave you waiting a long time to sell your home just for the sake of saving a thousand pounds or so on fees.

Pick an agent that has plenty of brand awareness in the area and has a good website with lots of properties listed for sale. You’re looking for an agent that has a good mailing list of potential buyers from the get go. An agent with lots of properties would have already attracted lots of enquiries about the houses they are already marketing similar to yours in the area. If you go on board with such an agent, you could tap straight into a decent sized list of buyers from the start, especially if you have priced your house well or offered a guide price. If you don’t know the area very well and you are trying to find the best estate agent for your home then I recommend going to google and finding a good independent local agent with the most decent reviews and with a decent number of properties listed on their website. Selling fees do vary but somewhere in the region of 1% to 1.25% is the average but it really does depend on the property.

Option 2:      Use more than 1 estate agent

Do all of the above in option 1 but also list it with another good estate agent, known as multiple agent or “Joint sole agency”, you should expect to pay a higher fee and the agents will either share the fee or “winner takes all”.

Option 3:       Agree to have an open day or open house weekend

Make sure that a popular local estate agent is promoting your property by listing it on all the popular property sites such as rightmove, primelocation, propertyclassifieds and onthemarket. This may not be quite as quick as selling it to a company for cash because the agent would need a week or two to promote the property online and gain some traction from potential buyers. Even then – it doesn’t guarantee a cash buyer or a smooth transaction but sure enough it stems you more chance of selling it faster than not having an open day and just doing individual viewings.

Option 4:       Enter the property into an auction.

For East Anglia a good example would be Brown & Co….or for auctions which have more of a national coverage maybe try Allsop. Auctions are a good option if you require a quick sale, and let’s face it, if you have to sell below market value at least you’re not just relying on 1 offer from 1 company. Auctions will have set dates of when the next one will take place and there will be a deadline to enter your property for that particular auction. Naturally the auction will need time to market your property. It’s worth noting that not all properties are suitable for auction, for more information on this, Allsop have some great information which should help point you in the right direction... Allsop guide to selling at auction.

Option 5:       Sell your home to companies offering to pay cash for your property.

These companies are doing this every day and can push transactions through from start to finish within – realistically 21 to 28 days. Watch out for the companies offering a higher percentage such as 95% of the market value etc. Some have been known to change their offer a lot later on in the sale process, leaving you no choice but to either accept a lower offer or pull out and be back to square one! Revive Capital Investments comes with our recommendation you can visit their website here.  

Option 6:      Sell your home to smaller property investors. 

By considering selling your property to landlords and individuals which maybe looking for buy-to-let investments or holiday lets etc, you may attract a cash buyer who is willing to invest in your property and complete just as fast…  as the big property buying companies would but … you may stand a chance of getting a much better price selling to a smaller investor. On the property classifieds website there are literally hundreds of property investors looking for the next investment for their portfolio. Try it … it’s a free service, you simply register and upload all of your property details including pictures and description etc and then it gets emailed to all the property investors registered with the site. Over a 7 day period you can expect offers by text and email from local investors subject to viewing. If you don’t get a high enough offer after a week then property classifieds put you in touch with approved local estate agents. It’s a good alternative way for all you people out there that are looking for a quick hassle free sale, to get offers on your property fast and not just rely on 1 large company making you an offer.

How long does it take to sell a property best and worst case scenarios regardless of which option I choose?

Very hard to put a timeline on! Let’s assume you have found your buyer… here is a list of the stages / milestones which will take time between the buyer first seeing your property and completion day.

1. Viewing day
2. The buyer has provided proof of funds to the agent
3. Potential buyer has made an offer
4. You have now agreed on a price
5. You or your agent have instructed your legal representatives and vice versa on the buyers side
6. You have provided your legal advisors with identification – passport etc
7. You have received a sellers questionnaire / fixtures and fittings list from your solicitor, completed it and returned it to your solicitor
8. The buyers solicitors have applied for searches on your property which can take up to 6 weeks as this can be multiple applications to the council, land registry and any management companies involved with your property. TOP TIP: If the buyer requests an express timeframe – some councils will offer a fast response usually 2 working days for a small fee, it’s worth asking the question however not all councils do this.
9. The buyer has scheduled a surveyor to visit the property and carry out a homebuyers survey or if there is a mortgage lender involved it may just be a mortgage survey.
10. The survey comes back and hopefully A) has no structural warnings or issues which may put the buyer off and B) the valuation is in line with the price which has been agreed
11. If there is a lender involved – the buyer should now have a final mortgage offer in place
12. Draft contracts have been sent out to both parties for signing
13. Your solicitor has sent the TR1 form (Transfer Title Deed) over for you to sign & return requiring a witness
14. The buyer has returned the signed forms and paid a deposit to exchange contracts – usually 10% of the purchase price.
15. Finally - completion – which can take place on the same day as exchange or at a delayed or later date depending on what is agreed. In order to complete the buyer must transfer the sum of money agreed to purchase your house to their solicitors clients account.
16. You will hear once the money has hit the account and no doubt a removal lorry will be outside shortly.

All of the above on average takes 8 to 12 weeks. Lots of people say – “ no that’s nonsense, we can have it all done a lot quicker than that “ which in fairness is possible, but the majority of it is simply out of your control.

What are the benefits of selling your home to a company offering to pay cash?

In terms of time frames quite a bit. This is because… the time frame explained above is a lot shorter if you sell to property investors:

1. They use the same legal teams to buy properties on a regular basis. On some occasions the company buying your house may not even require searches to be done – which saves a lot of time.
2. Also, as they are most likely paying cash they will not need to worry about involving banks or waiting for underwriting decisions.
3. Surveys are also not always essential depending on what is intended for your home and should a survey be required a lot of these companies offering to pay cash have their own internal surveyors which speeds the process up somewhat.
4. You will save money on estate agent fees if you’re selling your home to a company that specialises in buying property for cash, a good example would be Revive Capital, they buy homes mainly from repossessions, will executors and insolvencies but also purchase property from individual home owners too.
5. Selling to cash investors, landlords or companies which offer to buy your home does have a timeframe advantage, it’s possible to get it done within 21 days from start to finish – cash in the bank.

What kind of offers am I likely to receive from companies offering to pay cash for my home?

It depends on what company you go to but it’s usually around 75% to 80% of the market value. Some advertise a lot more, but I wouldn’t believe everything that’s advertised. By the time you’re at the point of potential exchange and completion it usually works out to be 80%. As mentioned in the selling options above in this article – you are more likely to achieve (80 to 85%+) if you go to smaller cash investors and landlords as offered by the PropertyClassifieds website.

What is a fare cash price for my home in terms of percentage of market value?

If you intend on selling your home to an investor there are a lot of things you need to know in terms of the costs which must be covered by the investor or company buying your home.

Let’s say your home is worth £200k and you have an offer of 85% which is £170k. On the surface it looks like the buyer has made and instant £30k for nothing right…