Companies have been buying houses for years but to some of you, this may be a new method of selling your property and also a step into the unknown. We will look at companies that buy houses, their processes, their pro & cons and also what kind of prices you can expect to be offered.
According to The Telegraph last month, the housing market is showing that sales are the lowest they have been in five years in August of 2018. ‘Just 79,000 sales were completed in the month, down by 4pc on the year according to data from LSL Property Services and Your Move’.
Due to this, there is a trend appearing in the form of people searching for alternative methods to sell their houses and fast. Auction houses can be a good method of selling but they will provide a mixed bag when it comes to performance results, read this guide for more information on the negative side auctions.
Companies that buy houses have been around for decades but with the power of the internet, they have become more prevalent in today’s market. In the past companies that buy houses could be seen in the pages of your free weekly paper offering to BUY YOUR HOUSE FOR CASH. The adverts have moved off the free press and onto our computer screens and phones.
First thing first you need to separate the wheat from the chaff. There are some companies that claim to buy your house but will actually be either collecting data to send to third parties or they will be passing the deals off to their investors to see if they can sell it that way.
When you contact Companies that buy houses, we presume that the aim is to find companies that will be physically buying the property outright. This isn’t always the case some companies operate in a different fashion.
Companies that buy houses for cash – If it is a cash buying company that you are looking for then there are normally a few questions to ask so that you can filter the wheat from the chaff. Ask them if they are buying your house themselves and also ask them if they can show you proof of funding.
Companies that resell houses – As you can imagine its an expensive pastime to buy houses. If you purchase 3-5 houses a month then you need very deep pockets. So some chose to act as agents and try to resell your property on the market and take their cut. They will ask you to market the property for less than its value. This can work however if your property doesn’t get an offer than you may have tarnished the value.
Companies that sell your data -There are some companies that collect your data to resell it on to companies that buy houses for cash. As they don’t have the facility to purchase the house themselves then they collect data and make their margin for selling the leads. The way to avoid this, ask the company are they buying your house or will they be selling your information on to a third party.
Most companies look to offer BMV (below market value). This can range anywhere from 15 – 25% BMV depending where your property is located and the current condition of your property. There will always be those companies that offer 90-10% of market value, however, as the saying goes ‘If it looks too good to be true it usually is’. With the addition of second-tier stamp duty that companies that buy houses for cash will come into this bracket, offers of normally have to factor in this cost. As an incentive, most companies will offer to pay for the solicitors and all of the fees involved in the sale for taking their offer.
Although it may seem like a relatively new system, it has been a popular method of selling your house for some time. With the power of the world, wide web companies that buy houses have become more prominent. So how does it all work?
Getting an Offer – most companies that buy houses will normally look to give you an offer within a few days. If your house is easy to value (if it’s on the market and there are a fair few sales comparables). If your property is more obscure or if it is in a rural area then they may look for another method to value the property. This will be to either get two local estate agents to give their opinion on the value or they may choose to attend the property themselves.
Contracts – once a price has been agreed you will then normally receive you will normally be asked to sign a legally binding agreement. This is normal as if you are selling your house through an estate agent then you would expect the same. Most contracts that you sign should tie you in for about one month. If they are trying to tie you in for 3-6 months then we advise that you look elsewhere. There is a lot of discussions on-line if you should enter into a contract, however, cash buying companies spend several thousands of pounds to purchase the property so without a contract they have no security.
Instruction – Once the contract is agreed and signed by both parties then solicitors should be instructed. In more instances, the buyer will offer to pay the solicitors fees. This will normally be on the proviso that you use one of there panel of solicitors and this is done to ensure a quick sale.
Progression – It will then be down to you to fill in your documents and get them sent back as quick as possible. Once all of your documents are back in and signed off by your solicitor then you should expect the searches to be paid for and the survey to be booked in.
Exchange & Complete – Once all of the pieces of the puzzle are in line then you will normally be offered an exchange date. Most companies will look to exchange and complete on the same day. Once your money is in the bank then send the keys to the new owner.
If you have any further questions then feel free to call a member of our team on 0800 612 1366.