How Do Quick House Sale Companies Work?
If you need to sell your house fast, it’s likely that you’ve already considered the option of selling to quick house sale companies but are a little sceptical about it.
It’s okay to feel that way, especially if you’ve not transacted with cash buying companies before. And the reason you’re here is to get the right information before making that weighty decision.
With the help of national estate agents and cash property buyers Springbok Properties, we will go into detail about how quick property sale companies work. So, let’s get down to the basics.
What are quick house sale companies?
A quick house sale company is a property buying business with the financial ability to buy property for cash immediately, without relying on a loan or mortgage. These companies will buy your house in any condition but at a discounted price, usually 85% of the market value of your property. They then find a suitable third-party buyer.
What this means is that the process is faster and stress and hassle free than if you’re selling to a buyer relying on a mortgage. Not to mention the advantage of avoiding a house chain or paying legal fees, estate agent fees or even commission. This is far much better than seeing your property stay on the market for up to 12 months with no buyer in sight.
I don’t need to tell you what this means…
When Would you Consider Selling your House to a Quick House Sale Company?
There are many reasons to sell your house to a property buying company, especially when you must access funds fast.
In most cases, you’ll want to sell your house fast if you’re facing any of the following situations:
- You’re going through a separation or divorce
- You want a relief from impending repossession, so you want to sort out your financial differences and clear your debts
- You’re moving abroad or changing jobs
- It is a perfect alternative to being stuck in a property chain
- You’re downsizing in anticipation of retirement or for health reasons
- You want to dispose of inherited property
- You want to explore a different channel other than a traditional estate agent
- You want a substitute to part exchange
What are the pros and cons of selling your property fast?
You may be ready for to sell your house to a cash buying company. But have you stopped to think about the advantages and disadvantages of making this move?
What are the Benefits of Cash House Buyers?
There are many benefits to selling your house fast to a quick house sale company, but I’ll only mention the main ones:
- Selling to a quick house sale company means you won’t have to worry about being in a chain. You also won’t be stressed by the possibility of your buyer’s house falling through, making it impossible to sell your house fast.
- When your buyer is depending on a cash offer, the sale is unlikely to fall through because they don’t need any approval for financing from a mortgage lender.
- The entire sale process is much simpler when a mortgage lender is not involved. You only deal with the solicitor and buyer.
- It’s fast. If you don’t have the luxury of time spanning 6 weeks or more, a property cash buyer will complete the sale in just two weeks.
Risks of A Quick House Sale
There are two sides to a coin. So, selling your house to cash buying companies also presents certain risks. Here are some of them:
- Lack of transparency. While some companies do due diligence to make the sale transparent, especially regarding their buying process, prices, and fees. Some rogue companies will not. This can complicate things.
- Gazumping. Some companies will agree with you on the price only to turn around and reduce it at the last minute. This can frustrate you.
- False property valuations. Some companies falsify property valuations. So, even if you’re ready to take 85% of the market value of your property, the price offer seems lower than you might just be a victim of false valuation.
- Prolonged tie-ins. You could find yourself with a contract that stops you from selling to anyone else, even if a better offer comes along.
Do homeowners have any protection when selling to quick house sale companies?
Unfortunately, there isn’t any clear regulation in the quick property sale market. As such, you don’t have protection when selling property to these companies.
The best way to stay away from rogue ‘we buy any house’ companies is to first take time and do a proper background check before accepting any offers.
Check that the company professes membership to the National Association of Property Buyers (NAPB). For any company to be accepted into NAPB, they’ll have to first register with The Property Ombudsman. This provides a platform for independent redress in case of a dispute. Sellers can get compensation where the cash buying company is in contravention of the Property Ombudsman’s Code of Practice. Besides, these companies also pledge to adhere to their Code of Conduct to offer the best service to their sellers.
Should you use a Quick House Sale Company?
I can’t give you a yes or no answer.
You must take time to think through your reasons for wanting to sell your house fast and what matters to you. Most importantly, make sure you explore the other options before going ahead with the sale.
What alternatives to a quick house sale do you have?
Consider the following options before proceeding with a ‘we buy any house’ company.
- Sell through a traditional estate agent
Before you decide to enter an agreement with a quick sale company, you can ask estate agents for a lower price if only to get a quick sale.
It might surprise you just that the amount you need to drop to attain a quick sale is less than the 25% a property buying company would ask for. However, do not ignore the other costs involved.
- Negotiate with your mortgage lender
If you’re going for a quick sale because you’re unable to keep up with mortgage payments, take the bold step of negotiating with your lender to know your options.
Most mortgage companies will offer you a flexible repayment plan or agree to extending your mortgage term.
- Explore your options to financing your long-term care
Maybe you want to sell your house fast to invest the funds in long-term care. If this is the case, make sure you’ve exhausted all alternatives. Seek help from a financial advisor with a specialty in long-term care funding.
What to look for in a quick house sale company
Here’s a checklist for things you need to know if you’ve decided about selling your house to a quick house sale company:
- Conduct an independent valuation. Get valuations of your house from three different estate agents. You can check the offer from the ‘we buy any house’ company just to be sure it is fair.
- Go for a property buying company that has membership with the National Association of Property Buyers.
- Shop around. Property buying companies differ from each other. Be on the look out for the differentiating factor.
- Confirm the property buyer’s credentials. Always check that they registered the company with TPOS. If a provider tells you they have signed the code of practice, ask for proof.
- Get the written word. Forget about verbal agreements. Get every detail in writing, possibly on email, so you have a reference if they change the offer, and you lost the hard copy agreement.
- Don’t be shy. There’s no harm in asking for better terms. Give it a shot.
- Have an independent legal advisor. You don’t have to use the company’s legal advisor. You can find an independent advisor.
- Read the agreement carefully. Don’t sign the dotted line until you’re sure about what you’re signing up for. The services of your legal advisor will come in handy.
- Be honest. Don’t give in to the temptation of providing false information. Failure to disclose crucial details could cause a delay when you least expect it.
- Steer clear of long tie-ins. Don’t sign any agreement binding you to a property buying company for too long. A good contract should be short.
- Request to see the survey. If the company makes a lover offer, you’re at liberty to ask why. If they point to the survey findings, you can ask to see. A business that plays fair will not hesitate to give you.
- Take time before committing to the process. Don’t be in a rush to commit too early in the process. At least not before you get all the surveys and legal checks and have the offer in writing.
Vetting a quick house buying company
One way to tell a quick house buying company is right for you is by asking the right question. This way, you’ll have all the information you need to reach a decision.
Here are questions you need to ask a quick sale company:
- Who is the property valuer and what does their valuation entail?
- Is the property company a direct buyer, or is there a third-party buyer
- What is the timescale for the sale? What stages are involved and when will they happen? What are the chances that these timescales could change?
- If the company is paying, what is the mode of payment? If the company tells you they have funds available immediately, ask them for proof. If a buyer is genuine, they will have no problem showing you.
- If the company has a third-party buyer, who is it? Can they afford to buy the property? What guarantee can they give that the sale will be complete within your preferred timescale.
- What is likely to cause a change in the offer price? Is it a conditional offer or is it subject to survey and contract?
- Is the company a member of the National Association of Property Buyers or are they registered with The Property Ombudsman?
Wrapping it up
If for any reason you’re dissatisfied with a quick house sale company, let them know and give them an opportunity to work things out.
It’s only when you’re unhappy with the solution offered to your problem that you can escalate the issue to NAPB or TPOS. If they are not members of these two bodies, then your case ends here.