How Much Less Do Cash Buyers Pay For Houses?

Learn how far below the market value house buying companies typically offer

If you’re wanting to sell your house and are open to alternative routes than the traditional estate agent, chances are you’ve heard about cash buyers. This is a legitimate route you can take if you want a faster sale with fewer expenses and admin.

Individual cash house buyers have been around for a long time. These are typically private investors or people who have the disposable funds to purchase your house quickly. Professional house buying companies are slightly newer, but are more regulated and established. The National Association of Property Buyers (NAPB) was formed in 2013 to help regulate this new wave of companies. Fast forward to today and cash buyers make up around 33% of all property market transactions. 

But as we’re sure you’re already aware, cash buyers typically offer less for houses. How much less exactly depends on a number of factors, which we’ll cover shortly. But first, here are some quick takeaways in case you’re in a rush.

Okay, now that’s out of the way, let’s dive into the nitty gritty.

Table of Contents:

• Do cash house buyers offer less?

• How much below market value do cash house buying companies offer?

• What does market value mean for property?

• How does a cash offer compare to other sale methods?

• Reasons why someone can benefit from selling their house for less than market value

• What is the ‘cash buyer discount’?

• Are cash house buyers honest?

• How does the cash house buying process work?

• Should you use a cash house buyer?

Do cash house buyers offer less?

The short answer here is yes, cash house buyers offer less for your property than market value. This is because they purchase your house quickly, sometimes in as little as 7 days. A fast sale raises more risks for the buyer than a slow, drawn-out one. This lower offer also takes into consideration the money you’re saving by not paying commission to an estate agent or auctioneer and fees to a conveyancer and surveyor. You may also save even more money by not having to keep your house on the market for months (25 weeks on average according to Zoopla data), which could result in you paying more utility bills and council tax. 

There are other risks that cash house buyers can help you avoid, such as a sale falling through because the buyer was denied a mortgage loan or because of a break in the property chain. Cash buyers, legitimate ones at least, purchase property with ready-to-go cash funds, so they don’t need to get a mortgage or rely on the property chain (i.e. selling their house to fund the sale).  

So although cash house buyers offer less, there are numerous benefits and savings that can make up for the lower overall price. Homeowner, Chris Hand, highlighted how the convenience of a cash buyer can outweigh the lower offer in certain cases in this recent article by The Times. 

After inheriting a cluttered house in Sheffield that was also on a leasehold agreement, Chris and his partner Josie sought out a cash buyer for a quick sale. 

“It was a bit of a hoarder house and so every time you looked in a new room, you couldn't see the room… It was his whole life. It was clothes. It was electronics. It was hobbies,” said Mr Hand. “We weighed the pros and cons. Obviously, we did take a little bit less than what we might have done if we'd have gone with the normal estate agents. But for us, the convenience really outweighed anything else. And so we were able to see past that. And we didn't pay any fees whatsoever.”

In the article, a clear benefit was highlighted to using a cash buyer over waiting out a slow and unpredictable open market. “For homeowners staring down the barrel of repossession or urgent financial pressures, a reputable cash buyer can be a lifeline, turning property into cash within tight time frames”.

How much below market value do cash house buying companies offer?

House buying companies typically offer 15-25% below market value. However, this varies greatly depending on a variety of elements. Your property’s location, unique elements and type can all affect your cash offer. For instance, if your property has structural problems or is uninhabitable and would require a lot of work and investment to sell, you may receive a cash offer 70% of the market value. Market conditions and the actual company you choose can also impact what you receive from a cash sale.

At The Property Buying Company, we’ve offered an average of 80.09% of the estimated market value of property around the UK. This is from a total of 2,997 offers with an average estimated market value of £284,097.89, where our average offer has been £227,542.63. Our offer of about 20% below market value is pretty much smack bang in the middle of what you can expect from cash house buying companies. 

For many people, this offer is exactly what they’re looking for when it comes to a quick sale. 

“I contacted Chris Atkins to organise the quick sale of a property,” wrote Christopher Finch on Trustpilot. “The offer was fair and was quickly and efficiently produced. Chris dealt with my many queries and I must say I was extremely happy with the professionalism displayed throughout.”

Whether it’s 75, 80 or 85 percent of the market value, sometimes avoiding lengthy property chains or legal processes can outweigh the slightly reduced sale amount. 

“Having fallen in love with a new house, with no previous plans to move, I needed a super quick sale and these guys saved the day" wrote another client on Trustpilot. “For me, the simple chain and the fact that all my legals were covered was worth the financial sacrifice, so I jumped at the chance. Once the Ts and Cs were confirmed by Raphael, the offer was concrete on my new home and I moved in just a month later.”

High mortgage rates have recently made cash buyers a more popular option for sellers who are frustrated with lengthy delays on the open market, according to City AM. The article references data from MPowered Mortgages, which claims cash buyers pay £28,000 less on average for a home than mortgage-reliant buyers. 

“Buyers who are able to show they have their finance fully in place when making an offer are much more attractive to sellers than those who don’t, and sellers will often accept a lower offer in return for the extra certainty these buyers represent,” Stuart Cheetham, CEO of MPowered Mortgages, said in the article. 

Although MPowered Mortgages says this lower price for cash buyers has increased by 12.4 percent in the last two years, it’s still only about 10% below market value compared to average house prices in the UK, according to Land Registry data. So it’s only representative of private cash buyers, not professional companies. 

Why do cash house buying companies offer less than cash buyers?

Cash house buying companies have higher overheads than private property investors. They have to think about the bottom line and how to make a profit while still paying their staff fairly and offering the trustworthy and reliable service that people expect. This is a big reason why they offer 15-25% below market value when individual cash buyers may only offer 10-15% below. It’s the only way they can continue operating. 

You will also need to pay for a solicitor when selling to a private cash buyer. You may also need to pay for marketing and a property survey to help the deal eventuate and go through. When using a house buying company, such as The Property Buying Company, you don’t need to pay for any marketing or any legal or surveyor fees. 

Another reason for the low offer is that professional house buying companies offer a more trustworthy and genuine service than individuals. The cash house buying industry isn’t currently regulated, so there are scam companies and people out there who get away with stealing money from sellers and buyers. Fortunately, there are ways to check if a cash house buying company is legitimate. It’s a lot harder to verify a private cash buyer. 

It’s these genuine buyers, who have the credentials and memberships with governing bodies, that offer guaranteed sales and service. For many sellers, the extra peace of mind that comes with a risk-free cash buyer is worth getting 75-85% of their property’s value instead of 85-90%. 

What does market value mean for property?

To put it simply, a property’s market value is its highest possible value on the open market. However, the International Valuation Standards Council (IVSC) and Royal Institution of Chartered Surveyors (RICS) offer more in-depth and globally recognised definitions. 

According to Michael Lever, a commercial property surveyor, the IVSC defines ‘market value’ as an estimated amount set on the date of valuation and agreed upon by a buyer and a seller when exchanging contracts. It should also be obtained through “proper marketing” and knowledgeable, prudent and well-thought-out behaviour. The RICS Red Book adds to this definition by stating that the ‘open market value’ should be the best-possible price based on there being a willing seller, period of marketing, legal formalities, consistent market state and transparent parties. 

How is a property’s market value determined? 

Your house’s market value is determined by a very rigorous valuation, which should be carried out by an RICS-accredited surveyor or a professional upholding these international standards. A surveyor will typically look at a variety of elements when determining the market value, including: 

• Recent sale prices of similar houses in the same area.

• Income (if it’s a rental).

• Cost to make the property habitable or modern (if necessary).

• Property’s layout, size, features, faults and location.

• Depreciation or appreciation factors.

How does a cash offer compare to other sale methods? 

When you’re working out the true value of a cash offer, it’s important to consider all the costs involved when selling your house through other sale routes. You should also think about the risks associated with these methods. 

Let’s say you have a house with a market value of £320,000. Here’s a quick breakdown of how that cash offer 20% below market value might actually compare to an estate agent or auction. 

There are numerous positive stories out there about people selling for slightly less to cash buying companies. On the Money Saving Expert forum one user spoke highly about their experience selling a London flat to a professional cash buyer.

“I was no longer living there, the house was in a dilapidated unmodernised condition, but I had been too busy with work to get round to selling,” they wrote on the forum. “I set my price based on comparatives on the street and immediate environs. Predictably they tried to offer around 10% less for a fast sale. In the end I agreed to knock off £4,000 from my price for a notional saving on Estate Agents fees.”

The user went on to say how the company’s professionality stood out, which resulted in them trusting the company to also buy a relative’s property. “Their professionalism was such that I referred them to a relative who had similarly abandoned their desirable London house, and with my help, agreed a selling price that was well in excess of  what the relative thought it was worth.”

Reasons why someone can benefit from selling their house for less than market value

We understand that getting less money for your house can seem a bit counterintuitive to selling. However, there are numerous reasons why someone would opt for a lower amount from a cash buyer. While we may not be the right choice for everyone, if any of the below reasons or situations sound familiar, we might be the right choice for you. 

“As a cash buyer, we offer something unique. We can guarantee a house sale within a set timeframe, providing peace of mind for our customers” says Karl McArdle, CEO of The Property Buying Company. “Unlike traditional estate agents, where sales can fall through due to mortgage issues or sudden market shifts, we’re always ready to step in and buy with cash – no chains, no uncertainty. While it’s not for everyone, our service is ideal for those who value speed and certainty. We’re here to ensure the sale happens, even if the open market presents challenges.”

Here are some of the reasons or situations where a cash buyer might be the best service for you: 

1. Old or damaged property

Old or damaged properties usually need a lot of work to get to them a modern standard of liveability. This could require significant investment that might lower your profit a lot. Mortgage lenders may also be less inclined to grant a loan for an old or damaged property, eliminating a mortgage-reliant buyer from your options. If the house is derelict or uninhabitable, you may only be able to sell it to a cash buyer or at an auction. 

2. Structural issues

Serious structural problems can make a house difficult to sell on the open market. These issues could range from cracks in the foundation and sagging floors to leaks in the roof or water damage. These properties are typically more appealing to cash buyers or private investors. For instance, at TPBC we buy any house in any condition, even those with structural issues that may deter other buyers. 

3. Japanese knotweed

This invasive plant is so tenacious, it can grow through your house’s foundations. While the weed won’t completely overtake your property or land, it can devalue it and make it harder to sell. According to a 2023 article by the Guardian, “5% of UK homes are afflicted with knotweed, potentially slicing £20bn off their collective value.” Mortgage lenders are a little more open to granting loans for property with Japanese knotweed, according to HomeOwners Alliance. However, it depends on the severity of the problem. So you may need to approach a cash buyer instead.  

4. Damp or mould

Selling a house with damp or mould can be extremely difficult, as it’s not uncommon for damp to diminish its value by 5-10%, sometimes as much as 15%. Some mortgage lenders may also see damp as a red flag and not grant buyers a loan. This decision is usually determined after a damp report. 

5. Unsafe or undesirable location

Understandably, public perception can have quite a significant influence on the desirability of your property’s location. However, there are also some main problems or red flags people look out for when it comes to locale. Living in an area with a high crime rate, bad transport links, a lot of traffic noise or a high flood risk can make finding a traditional buyer very difficult. High council tax rates or even regional second-home policies can make selling property harder, as was found in this article by The Times. If your house has any location problems, it can impact buyer interest and even mortgage loans. 

6. Tired of property chains

This is a bit more of a personal one. Maybe you’ve been stung by a broken property chain in the past. For whatever reason, if you’re tired of having to rely on and wait for other property sales to complete for your sale to go through, it might be time to contact a cash buyer. Legitimate cash buyers buy property using readily available cash funds. This means they’re not hamstrung by property chains. 

7. Short leasehold

Do you own a leasehold property? If your agreement has a short amount of time remained (anything less than 60 or 70 years), it’s going to be much harder to sell. You can learn more about this in our article covering what happens when a leasehold expires. Essentially, the shorter the leasehold, the more cost and risk the buyer takes on. Mortgage lenders are also going to refuse loans for these types of properties. Often you can save yourself a lot of stress, time and money by selling to a cash buyer. 

8. Need a fast sale

Quite simply, you want to sell your house fast. Your reasons for this can be very specific. Some people inherit houses in the UK when they’re living abroad and just want to sell them quickly. Others are going through a messy divorce and can benefit from selling and moving on without so much fuss. You might be relocating and not have much time, need money quickly for another purchase, have bad or noisy neighbours or are worried about capital gains tax. Whatever the reason, if you need a fast sale, a cash buyer is your best bet.

What is the ‘cash buyer discount’?

The ‘cash buyer discount’ is a phrase commonly used in the UK property market in reference to the fact cash buyers typically pay less for houses than mortgage-reliant buyers or anyone on the property chain. These discounts vary across the UK depending on location, with Scotland, north-west England and north-east England seeing the highest cash buyer discounts (12.4-13.4%), according to Property Soup. 

So how much less can you offer as a cash buyer?

It's for those aforementioned reasons and situations (i.e. fast sales, simplified process, houses in any condition) that sellers are willing to offer discounts to cash buyers. So if you’re a buyer with the necessary cash funds to purchase a house without having to get a mortgage loan or sell your own home, you may be able to buy a house as high as 13 or 14% cheaper. 

However, it will depend on the seller’s interests and priorities. Not every seller is going to want to prioritise speed or simplicity over money. Location plays a big role in the cash buyer discount as well. Big cities with a more competitive property market, such as London, can make it harder to offer less as a cash buyer. Foreign investors (who also pay with cash) in London can actually drive up the cost for cash buyers compared to mortgage-reliant buyers, as reported by Property Soup. 

This data from MPowered Mortgages, as reported by Property Soup, also found that cash buyers can pay anywhere from 3.8% less to 13.4% less for houses. It all depends on where in the UK you’re looking. 

“Two factors explain the power cash buyers have to pay less for the home they want – scarcity and speed,” says Stuart Cheetham, Chief Executive of MPowered Mortgages. “As the property market heats up and interest rates fall, the number of house hunters using a mortgage to fund their purchase is surging and cash buyers are becoming relatively rarer.

“Then there’s the trump card that cash buyers can play – speed. Rising demand is making a slow process take even longer, and the average seller in England and Wales now has to wait 152 days between accepting an offer and completing their sale.”

It’s this added level of certainty and speed that often sees cash buyers receiving discounts on property. 

Are cash house buyers honest? 

There are numerous genuine and trustworthy cash house buyers out there. Most of these are cash house buying companies with NAPB and TPO memberships, high Trustpilot reviews, real client testimonials, legitimate cash funds and decades of experience. However, there are plenty of honest individual cash buyers, but you just need to be cautious and vet them. Read our article on legitimate cash buying companies to learn what to look out for when vetting genuine companies. Doing this with individuals can be hard, hence the higher risks. 

The Property Buying Company is a legitimate and honest cash house buyer. We have a 4.6/5 rating on Trustpilot, over 20 years’ experience, NAPB and TPO memberships, video testimonials from real people and on-site cash funds to boot. We uphold the highest trading standards as outlined by these governing bodies and have a consistent and proud reputation for quality service and transparency. 

How does the cash house buying process work? 

The process is going to be slightly different if you’re using a cash house buying company (e.g. The Property Buying Company) or a private cash buyer. Here’s a quick breakdown of the typical steps involved for both routes. You can also read about our quick cash buying process in more detail.

Should you use a cash house buyer? 

Honestly, the answer to this question depends on your specific situation and priorities. If you want to sell your house for the highest-possible profit no matter how long it takes, a cash buyer probably isn’t for you. If you need to sell your house quickly and are happy with getting less from the sale if it means you don’t have to stress or use so much time or money doing it, you could benefit from a cash house buyer. 

Here are some of the common differences when choosing a cash buyer over an estate agent:

You should really spend some time weighing up your options. If you’d like, you can always get in contact for a free, no-obligation cash offer. That way you at least know what you could stand to make by selling to a cash buyer. If it’s not what you were expecting, there’s absolutely no need to continue. But it might also be more than you were expecting, especially when you consider the time, energy and money you’ll save. 

We always recommend doing as much research as possible before making a decision this big. You can learn more about how to sell your house fast with us or review our list of the best quick house buying companies. If it ends up that you’d like to explore selling your house for cash, we’re always here to help.