There are several reasons why you might want to use a cash buying company to sell your house – relocating, emigrating, divorce/ separation, financial difficulty, facing repossession, you’ve inherited a property and so many more – and it’s a great option but there’s one thing you should remember when looking at cash buyers… if it’s too good to be true, it probably is.
The cash buying industry isn’t regulated yet so there are scammers out there.
But there are some genuine companies too. There are things you should look out for and research beforehand to protect yourself and your assets.
We’ve compiled lots of the need-to-know information for you to make an informed decision.
So here goes…
What is a cash buyer
Simply, a cash buyer is someone with enough money to be able to buy outright, they do not need to borrow money to buy a house.
How does selling to a cash buyer work?
Selling to a cash buyer follows the same process as selling to a non-cash buyer, the only step missing is that you don’t have to wait for the buyer to get an approved mortgage for the sale to go through.
You agree a price
Conveyancing is carried out
Exchange and complete
How long does selling to a cash buyer take?
Selling your house to a cash buyer is a much faster process. Typically, you’re able to sell your house to a cash buying company between 7 – 28 days.
You can also choose the date you want to sell which can be especially helpful if you’re selling because of emigration, relocation or you’ve found a house you want to move forward with.
Advantages and disadvantages of selling to a cash buyer
In any situation it’s always worth exploring your options and working out what the advantages and disadvantages are to each situation/outcome.
- It’s faster. If the person buying your house is a cash buyer, they won’t need to sell their house first or apply for a mortgage and wait to be approved before the sale can go through – which can take some time. And according to Quick Move Now, 17% of failed sales are because the person was unable to secure a mortgage.
If you’ve already found a new property you want to buy, you need a quick sale, or you’re relocating, this can help speed your process up by not having to rely on the financial stability of someone else.
- You won’t need to put more money into your house completing repairs or upgrades.
- You don’t need to worry about viewing or appraisals. By selling your house to a cash buyer, you don’t have to go through a viewing and possible appraisal with every single buyer who might be interested in your house.
- There’s less chance of the sale falling through. Quick Move Now said in 2019 ¼ of house sales fell through. This is again, largely because you aren’t relying on someone to be approved for a mortgage or to sell their own house before they can buy yours.
As with all situations, there are some disadvantages to selling your house to a cash buyer.
- It will sell for a lower price. Typically, a cash buyer will buy a house for 80-85% of its market value. (If they offer 100% market value, the company isn’t genuine. If they buy your house for 100% they’d be making no money, so it’s likely the price would drop drastically at the last minute.)
- Scammers are out there, and you can get caught by them. 97% of cash buyers aren’t genuine cash buyers and unfortunately the industry isn’t regulated.
- A cash buyer can change the price last minute. Because cash buying companies aren’t regulated, a company can change the price at the last minute and you may be forced to take an offer you didn’t plan on taking. If you’ve got plans in motion that are relying on you selling the house with this buyer, you’re going to suffer. And when they drop the price it’s often by £10,000’s.
- The sale can still fall through. There are lower chances of this, but it can still happen.
Things to look for in a cash house buyer company
Because there’s not a regulating body when things are done that aren’t right, there’s very little you can do about.
There are a few things you can look for and research to try and minimise your risk when using a cash buyer.
If it seems too good to be true, it probably is.
If a company offers you 100% market value for your house, it’s a scam.
Check there isn’t a cancellation or withdrawal fee – there shouldn’t be.
You should not be signing an option or lock-in contract or make you sign an RX1 form.
If a company says they’re with a regulating body, they’re lying – there isn’t one. There are redress schemes that are designed to help raise the standards within the sector that companies can sign up to and will follow a code of conduct that may offer you some protection.
Check customer reviews – these could also be ingenuine – if they’re spread over a long period of time and aren’t all written in the same tone, they’re more likely to be from actual people. If there are reviews for a UK company all coming from other countries, it’s probably a scam.
You can also look up the company on Companies House. A company that is buying houses should have a high profit turnover given they’re buying with cash funds.
Reputable companies will not charge any fees. (They’re deducted from your price)
Make sure you ask for proof of funds from your cash house buyer. They need to be able to prove this with their offer.
Have a solicitor look over any paperwork to be sure you’re using a trusted company.
The National Association of Property Buyers run a redress scheme where it’s members follow a code of practice. The scheme is voluntary and it allows you to access TPO’s free, impartial and independent dispute resolution service if you do have a complaint. You can find out more about the scheme and see which companies are members here: https://napb.co.uk/
Should I use a cash buyer?
Using a cash buyer can be an easy way to get scammed. But that’s not to say it isn’t an option worth considering. Just make sure you do your research before moving forward. And if you’re still not sure after you’ve done your research, then as always, seek legal advice.
About Richard Mews
Richard has 31+ years of property experience, has been Chairman of several regeneration committees and has helped more than 600 homeowners and landlords get easy, stress-free personal solutions for selling their property. Richard’s goal is to give you unbiased help to receive a quick house sale, even if that means not working with him.