If somebody is willing to buy your property outright for cash, can you trust it?
We find out everything you need to know about cash house buyers, and what to look into!
It might be quite hard to believe that someone is willing to offer to buy your property outright, for cash, without the need for a mortgage. It happens though, and more than you might expect – there are even companies out there now that will offer to buy your home for cash, and we’re one of those!
The commonly used phrase is cash house buyers, but from a seller's perspective, how do you find out if they are legitimate and that you won’t get scammed or let down. We go through everything you need to know about cash buyers, and cash buying companies, and how you can determine their legitimacy in this article
If you're looking to sell your property to a cash house buyer, there are a lot of options to choose from, so how do you know who you can trust? You might have seen some trust or accreditation logos on their website, and we go through who they likely are, and whether the industry is regulated for you below.
A cash house buyer is someone who can afford to buy a property without requiring any additional funding which would traditionally be in the form of a mortgage or loan.
To be considered a cash buyer the funds must be available to them immediately. People sometimes misunderstand this and consider themselves cash buyers because they are selling another property, but you shouldn’t be reliant on a property sale to make the purchase.
The main benefit of a cash buyer is that they can act quickly, cutting out the need for a mortgage in the process saves several weeks. They also aren’t in a chain so are less likely to fall through on a purchase and therefore are generally a more reliable, and sought after buyer, from the sellers point of view.
You’ve listed your house for sale, let’s say for £200k. You’ve got a lot of interest but one of those parties states they are a cash buyer, at first it might be quite hard to get your head around the fact that someone would be able to just spend that amount of money outright and that might be immediately followed by the thought, is this a legitimate offer?
Well, we can assure you that property cash buyers are more common than you may actually think, and for the most part, there are investors or companies like ourselves. Keeping that in mind, there are definitely legitimate investors and companies out there that will buy your property for cash, with no issues – there are however those that are more unscrupulous.
There are two sides to this, as to determine whether an individual investor or a cash house buying company is legitimate is slightly different. Let’s take a look at each type of cash buyer separately and go through what you should be looking into.
There are fewer checks that you can do for an individual than a company, so your main concern should be the proof of funds. This is hopefully something an estate agent will take care of, but before taking your property off the market or agreeing on a sale, you should see if the cash buyer can actually afford to buy the property outright.
In order to prove the funds, they should show a bank statement with the cash amount, but also statements over the past few years and months to provide evidence of how they have built that money up. Depending on the way the money has been obtained you may require further proof, such as if it’s through a will or selling shares, as you have to check that it hasn’t been acquired by criminal means.
This is so important as it could prevent wasting a significant amount of time if they are unable to fund the purchase, or have to obtain a mortgage.
If you are looking at selling your home to a cash house buying company, there are a lot of them out there, and we’ll go into more depth about what exactly these companies are and how to choose one soon.
In regards to the legitimacy of cash house buying companies, there are a few ways you can check. Just like with an independent investor, you want to ask if they have proof of funds and ensure they aren’t getting funding from elsewhere. The advantage of selling to a company however is that they can be a member of The Property Ombudsman & The National Association of Property Buyers, although not regulated, these are independent bodies that offer a free redress scheme and extra protection for the seller.
As well as that, you should look to see their reviews from previous customers, nothing is perfect when it comes to selling a house because there can be a lot of hurdles even as a cash buyer – but you want to ensure that generally, they are positive in particular from a customer service point of view.
In a way, there is the evolution of your standard cash buying investor. They are companies that buy properties for cash, just as the name would suggest, but they tend to buy far more properties over a wider range of locations.
These cash buying companies often refer to themselves as “Sell House Fast Companies” or “We Buy Any House Companies”. Every company is different but they generally can move far quicker than your standard investor as they have priority relationships with solicitors and progression departments to speed through the process as quickly as possible.
In return for the speed, just like a normal cash buyer, they tend to offer you below market value for your property, which again varies in price depending on the company.
There are loads of different cash house buying companies out there, including us! How do you decide the best one? Well at the end of the day, it’s the company that offers you the most and are going to provide you with the quickest sale, and smoothest process. We feel the best accurate representation of this, other than getting a quote, is to look at the reviews of the company including their rating, and frequency.
We actually wrote a detailed post on the best quick house sale companies, including how to vet cash house buying companies and more research into the best options.
Technically speaking, no it’s not an industry that is regulated by any particular body.
Although there is no official body, there is an Ombudsman that is optional to be part of but you should always look to see if the company you are dealing with are. The main thing to look for when dealing with a cash house buying company is a blue The Property Ombudsman logo.
If a company is a member of The Property Ombudsman, it provides an independent resolution designed to achieve a full and final settlement of the dispute or any claim made against either party. It adds an extra layer of protection for both consumer and property agent – which isn’t there if you deal with an individual buyer.
Cash house buyers can also become members of The National Association of Property Buyers which is a group of companies that are committed to providing the highest possible standards in the sector, working closely with the Ombudsman.
That’s a question only you can answer. It really depends on your personal situation, mainly because, almost always a person who is buying in cash whether it be an investor or company is looking for a good deal on your property and will be offering you below what it’s worth.
On the flip side of the coin, you’re getting a very quick sale with little to no hassle, especially if you go down the route of choosing a company to sell to.
It all depends on your urgency of the sale, and how much your time is worth to you. If you do choose to explore your cash sale options, we can provide you with an offer on your property at completely no obligation, all it takes is a little bit of time on the phone to go through your property in more detail, so it’s worth a try, right?