House buying companies, like ourselves, offer an alternative to the traditional methods of selling property such as the open market or an auction. The rise of house buying companies is a fairly new, with ourselves one of the larger more established companies in the industry only being around since 2012, so understandably people have a lot of questions about how the industry works and whether it’s a viable option for them.
In this article we’ll try be as transparent and unbiased as we can to inform you about what the industry is, here’s what we’ll cover:
- What is a house buying company?
- How do house buying companies work?
- How much do house buying companies pay?
- What are the benefits of using a house buying company?
- Should I use a quick sale company?
- Are they legitimate?
- Which house buying company is best to sell too?
House buying companies are exactly what they say on the tin, they are companies that buy your property which is usually done by their own cash reserves or being owned or associated with investor(s). If you choose to sell down this route then you will hopefully be selling to a company who have had time to streamline the house buying process with favoured solicitors and don’t require a mortgage, which speeds up the process of selling your house significantly.
Majority of the time it can be slow, complex and costly to sell your house through traditional methods, which is why house buying companies have seen such a rise in popularity in recent years.
Think of it as very similar to the motor industry which has shifted in recent years with the emergency of We Buy Any Car & it’s competitors like We Want Any Car or Money4yourmotors. It’s the same idea in the property industry, just at a much larger scale with a bigger required investment & risk.
It depends as some house buying companies operate slightly different to one another, but we’ll go through the most common processes. You typically contact the company and provide details around the property you are looking to sell, it’s condition and the circumstances. They will then do some online research to provide you with an initial offer, and all of this is usually done quite quickly within a few hours of first contact.
This is where it differs slightly from company to company. Some companies will get independent valuations from local estate agents, where as other might send their own employees to go value the property.
Once that has happened a finalised price will be offered at which point typically a RICs survey will be ordered. If everything appears to match up with the valuations and there are no major surprises then the home is purchased which can usually complete in around 7 days.
The speed of completion is significantly helped by the streamlined process and the fact house buying companies are buyers in a position to proceed straight away, with no need to consider a property chain.
As you may have suspected with a little bit of online research or by enquiring with a house buying company, they don’t offer full market value, or simply put, they wouldn’t be in business very long.
Your next question is probably, well if they don’t pay full market value then how much do they pay? It’s not the answer you want to hear but it’s complicated. A property in a desirable location that’s in a good condition may mean a house buying company will pay that little bit more to get it on the books as they will probably be able to sell it on much quicker where as they may offer you lower for a property that’s in the opposite circumstances.
To provide an estimate figure touted by most house buying companies it would be 80% of the properties true value, but again this is subject as to what they value the property at initially.
In return for taking the below market value offer you are essentially provided with a service that takes the hassle out of selling. House buying companies offer a few benefits to prospective sellers, some you may not have considered:
- It’s fast. You’ll typically get the offer within the day & can complete in around 2-3 weeks as an average, but it can often be sped up if required.
- Due to the speed you avoid the household bills you’d be paying over the duration of a typical house sale.
- There’s no estate agent fees or auctioneer costs to consider, in fact a lot of house buying companies will cover your solicitor’s costs as for speed reasons it is beneficial to use the ones they recommend.
- They don’t buy the house to live in it, so they can often work to a completion date that suits you.
- There’s no chain, so it’s much less likely to fall through.
- It can be extremely beneficial in certain circumstances when the speed of a traditional sale just won’t cut it, for instance it’s a better alternative then getting your home repossessed.
That’s completely up to you. You’re likely to achieve more money on the open market, but there’s no guarantee as to when or if it sells. If your circumstances mean that you are likely to need a quick sale and are willing to take a lower offer then it’s maybe something you should consider.
Most sell house fast companies will provide you with an offer free of any charge, so you could always get an offer lined up as a backup with little hassle to yourself. It can be an excellent option to stop a repossession, repair a property chain break or if you are needing to move quickly for a job.
Unfortunately, we see it every day, comments on our social media channels calling us “scammers” and house buying companies generally get a bad reputation around being illegitimate. We can’t speak for all the house buying companies, but it’s generally not, are most we buy any house companies are completely legitimate.
If you’re looking at selling your home there are two forms of regulation you should look to see whether the company are certified with, to ensure they are legitimate.
The first is The Property Ombudsman (TPO) which is a free, impartial and independent service which acts as an agent to protect both consumers & property agents alike. Companies that sign up to the TPO sign a document to ensure they operate to the highest standard and are committed to raising the industry standards. In joining the TPO as a property buying company you need to adhere to strict codes of practice.
The second is the NAPB or The National Association of Property Buyers, which is a voluntary membership group for property professionals which is keen to help sellers find legitimate house buying companies. Members of the NAPB must follow strict professional standards which you can find in their codes of practice. Be aware that there are quite a few companies that use the NAPB logo without actually being members, you can find all the actual members on the NAPB membership page.
There are tens of cash buyers out there, so how do you decide which is the best one for you? The truth is it’s quite tricky. The best thing to do is to do your research and find out which one will be able to provide you with the best value, majority of house buying companies will provide you an offer free of any charge.
There are a few things you should look at when researching the house buying company you want to sell to, which are:
- Check if there are any fees to pay.
- Find out how long their guaranteed time to sale is.
- Check their reviews across a variety of different platforms like TrustPilot, Reviews.co.uk & Google review, and read a few to make sure they are legitimate.
- Make sure they are members of the NAPB & TPO
We’ve also written a page about “How We Compare” which is a review of a few of our competitors on some of the above aspects.