The Inside Scoop on Companies that Buy Houses
Learn everything you need to know to be informed and not fall prey to scams from companies that buy houses!
What are Quick House Sale Companies?
A ‘we buy any house’ company is effectively a company that buys houses for cash, quickly.
Because there’s no mortgage to be approved and no property chain to consider, these companies can complete property transactions much quicker than an average buyer going through an estate agent.
Whereas a typical property transaction can take around four months to complete, ‘we buy any house’ companies can complete in as little as one week on some occasions, and usually within one month.
‘We buy any house’ companies may also be referred to as ‘Fast home buyers’ or ‘Cash house buyers’, but they’re exactly the same thing.
This Guide Will Help You:
- Why use a ‘We Buy Any House’ company?
- Are ‘We Buy Any House’ companies a scam?
- How to avoid ‘We Buy Any House’ scams
- ‘We Buy Any House’ scams to look out for
- Actions you can take to avoid ‘we buy any house’ scams
- The key questions for homeowners
- The 3 most common ways to sell a property compared
Why use a company that buys houses?
The main reason why sellers consider using a ‘Fast home buyer’ company is because they’re looking for a quick sale. Whether it’s due to financial difficulties, a last-minute move abroad or a sudden change in circumstances, the main benefit of selling to them is the speed at which the transaction can be completed.
Selling the traditional way, through an estate agent, can be a lengthy process, so if time is of the essence, then a ‘cash house buyer’ company is a great alternative.
The other reason why companies that buy houses quickly have become so popular with homeowners is because they’re happy to buy properties in any condition.
So, if a house has subsidence issues, Japanese knotweed or nightmare tenants for example, it can be very difficult for the owners to sell, and it could sit on the market for several months, or even years.
Most ‘we buy any house’ companies will buy properties regardless of their condition, so homeowners with hard-to-shift properties have increasingly turned to them in recent years as the best route to a hassle-free sale.
Are companies offering to buy your house a scam?
The short answer to this is NO. There are lots of reputable companies that buy houses for cash out there, but the key for homeowners is to find one that’s trustworthy, reliable and legitimate.
Companies that buy houses for cash are not formally regulated by the government, which unfortunately means that a lot of sharks and fraudsters operate in the fast home buyers industry.
How to avoid quick house sale scams
Remember, as with anything, if something seems too good to be true then it probably is.
While it’s true that fast home buyer companies can purchase your property and have the money in your bank account in 7 days, you don’t get anything for nothing, and like any company in any industry, they are trying to make a profit.
With that in mind, here are a few tips to help you avoid some of the shadier companies out there:
- Be wary of any company that claims to offer 100% of your property’s market value
- If they ask for money up front
- If they ask you to sign a lock-in agreement
- If they don’t have a company registration number on their website
- If they claim to be regulated by a government body
- If they ask for a cancellation or withdrawal fee
The biggest red flag with a ‘we buy any house’ company is one that offers you ‘up to 100%’ of your home’s market value. In fact, anything over 85% is unlikely, so bear this in mind when you’re doing your research into different cash house buyer companies.
Legitimate cash house buying companies will usually offer around 75%-80% of your home’s market value.
It may creep slightly over 80%, but anything above 85% is almost certainly not genuine.
No genuine cash house buying company will ask for money up front. Ever. If they do then walk away immediately and don’t look back.
Some of the shadier companies in the fast home buyers industry will ask you to sign a lock-in or option agreement. This basically means that you’re legally bound to sell your house to them or a third party of their choosing, and you won’t be able to change your mind.
All genuine ‘we buy any house’ companies will avoid pressure tactics and hard sells, and give you the flexibility to find another buyer if that’s what you decide to do.
Nowadays it’s easy for anyone to set up a professional looking website and lure in unsuspecting victims, but all genuine companies will have their registered company number displayed on their website.
As mentioned before, the fast home buyers industry is not regulated by any government bodies, so any company that claims otherwise is lying.
That’s not to say they don’t have an accreditation, which we’ll go into a bit later. However, if they claim to be regulated by a government body, they’re NOT.
Genuine cash house buying companies are all about flexibility and freedom of choice. Any company that tries to charge you for changing your mind should be avoided like the plague.
‘We Buy Any House’ scams to look out for
Some of these have been touched on in the previous section, however here are a few common tricks that fraudulent ‘we buy any house’ companies use on unsuspecting homeowners.
Probably the most common trick you’ll find is the lead generation companies. Essentially, these companies can’t actually afford to buy your property at all, they’re simply selling your data to other companies.
Some of the more unscrupulous ‘fast home buyer’ companies will use their own valuers to give you a knock down valuation of your property.
All genuine ‘we buy any house’ companies will either get valuations from 2 or 3 estate agents, or they’ll get a qualified surveyor from the Royal Institute of Surveyors (RICS) to carry out the valuation.
Most genuine ‘we buy any house’ companies will cover your legal costs, and there’ll be no fees to pay. And if there are any fees, they’ll be explained to you upfront so you’re aware from the start what fees will apply.
However, some of the more immoral companies will sneak hidden fees into the property sale, and these will often be kept in the background until completion day, when you’ll have very little time, if any, to do anything but pay them.
If you’ve not had an offer guaranteed to you in writing, then you are at risk of being ‘gazundered’. This is when the ‘cash house buying’ company suddenly lowers their offer by several thousand pounds just before completion, knowing full well that you’re unlikely to be able to pull out at that point.
An ‘options’ agreement can leave you vulnerable to your house sale falling through, and still having costs to bear. Some options agreements will give the company the right to sell your home through a third party, effectively making them a middleman and a more costly type of estate agent. The other downside of this, is that if they’re looking for a buyer on your behalf, there are no guarantees they’ll find one, and you may have been better off selling via an estate agent in the first place.
Actions you can take to avoid scams of companies who buy houses
Now we’ve covered some of the most common scams to be aware of and how to avoid them, here are some practical, proactive steps you can take to avoid being another victim.
- Research the company
Check with Companies House to see if the company you’re dealing with are registered. And if they are, then dig a little deeper and find out a bit more about their trading history.
Their registered company number should be displayed on their website, and even if it is, cross check it against Company House’s records. Some fraudsters will stick any old number on the website in the hope that’s enough to convince people, so make sure you double check it.
- Arrange your own valuations with local estate agents
Most estate agents will come round and give you a free valuation on your property, so ask 2 or 3 near you to come and value your home so you have a good idea of what it’s worth.
This will stop you falling prey to the lower valuation trick.
- Find reviews on the company
Whatever you do, don’t just take the testimonials on the company website as gospel when you’re looking into them.
Check impartial websites like TrustPilot for legitimate reviews and make sure they’re recent too. If they’re all quite old or there are very few, then it may be best to walk away.
If you’re getting a bad feeling about a company, then go with your gut instinct.
- Ask for their solicitor’s details straight away
When you have the company’s solicitor details, you should contact them to find out if the company’s genuine.
If for any reason, the ‘we buy any house’ company is hesitant or refuses to give details of their solicitor then walk away immediately.
- Request proof of funds
When an offer has been made, ask the ‘fast home buyers’ company for proof of funds. You’re perfectly entitled to do this and it will show if they’re genuine or not.
Many of these companies act as a middleman, and if this is the case they won’t have the funds to back up their offer. In cases like these, or if they refuse to show you their proof of funds for any other reason, just walk away.
- Check if they have professional accreditations
Just because the ‘cash house buyer’ industry is unregulated, it doesn’t mean the companies that operate within it should have no credentials.
Legitimate companies should be a member of the National Association of Property Buyers (NAPB), the Property Redress Scheme, and the Property Ombudsman, and they should have these displayed clearly on their website. They may also be members of other regulatory bodies like the National Association of Estate Agents.
The single best thing you can do to proactively avoid being scammed is to trust your gut instinct. Remember, if something sounds too good to be true, then it probably is.
The key questions for homeowners
Now that you’ve got a good idea of what to look for when finding a reputable company that buys houses for cash quickly, we can look at the burning questions that most homeowners will have.
Roughly speaking, it’s likely to take anything between 7 and 28 days. Most transactions are at the longer end of this timeframe, but it is possible to have a straightforward sale completed in one week.
Usually around 75%-82% of its full market value. And bear in mind, if your house would be classed as ‘difficult to sell’ through an estate agent then the full market value is likely to be lower than other properties in the same area that are in good condition.
You shouldn’t have to pay any fees once you’ve accepted an offer. The ‘we buy any house’ company should cover all transaction fees and your legal fees, however the legal fees are likely to be factored into the offer they make you for your property. So even though you won’t pay them directly, they’ll still be coming out of your pocket.
The best thing you can do is to conduct your own research. Find independent reviews online, ask family and friends if they’ve ever used a similar company to sell their house, and contact some ‘we buy any house’ companies directly and make some enquiries.
Genuine companies will be happy to answer your questions with no obligation to agree to anything and they won’t give you the hard sell. And remember, if they ask for any form of payment upfront, or for you to sign a lock-in agreement then walk away.
The fact is, most property sales are made through an estate agent, and you’re far more likely to get your home’s full market value this way.
However, because ‘we buy any house’ companies can complete a purchase in a matter of weeks, they may be the ideal solution for some homeowners, depending on their circumstances.
Ultimately, the key benefit of selling to a ‘cash house buying’ company is the speed at which they can complete the purchase. This should be weighed up against the fact the homeowner is highly unlikely to get full market value for the property, so they need to decide what’s best for their own circumstances.
The answer to this varies throughout the country, and the property boom around the UK since May 2020 has skewed the figures as well.
For example, in some areas properties were being sold for far more than their asking price, and some parts of the country saw prices increase 10%-15% over 12 months.
However, under normal conditions, when the property market is less hot, you can typically expect a property to sell for around 5%-10% less than its initial asking price.
More Questions? That’s what we’re here for!
If you still have a burning question you’d like answered, or want to know more about the cash buying process, then don’t hesitate to get in touch. We’re property experts, and we’re more than happy to help.
The 3 most common ways to sell a property compared
There are a few ways to sell a property, but the following three are typically the most common.
This handy table will help you to weigh up the pros and cons of each method.
Please note, all figures are approximate and there can be some variation between them.
|75%-85% of market value
|Up to 100% of market value
|Up to 100% of market value
|0% – although legal fees are likely to be factored into the offer
|1%-3%, plus legal fees
|0%, although legal fees are additional, unless you do your own conveyancing.
|4 months on average. Largely depends on the length of the property chain and if any issues arise.
|Depends on who you’re selling to and if they’re a cash buyer.
Likely to be closer to 4 months than 28 days though.
|None – the home buying company will handle everything
|None – everything is taken care of by the estate agent, although you may need to make yourself scarce for viewings.
|Lots – you’ll have to do all of the marketing an estate agent would, like taking photos, posting the house for sale online and in local press, arrange viewings and find potential buyers.
|Unregulated – although the company may be part of a regulatory body like the NAPB
|Fully regulated – estate agents are legally required to be part of a regulatory body
|Unregulated – as an individual you won’t need to be regulated by any membership body
So as you can see, each method has its own pros and cons, and when you’re deciding which route to go down, you’ll need to weigh up what’s most important to you, as no single method is perfect for everyone.
Hopefully, you now have a much better understanding of ‘we buy any house’ companies and how they operate, but here are a few more points that haven’t been covered:
How much would I lose by selling a house as is?
This depends on the condition of your property and the scale of the problems. For example, a few stained carpets and a bit of peeling wallpaper is unlikely to drop your offer price by thousands of pounds. However, things like subsidence, Japanese knotweed or fire damage could knock a few thousand pounds off of any offer price.
Can I put an offer on a house if I haven’t sold mine?
Yes, absolutely you can, but it’s important you’re aware of the pitfalls. Most sellers are looking to complete the sale as quickly as possible, so if you’ve had an offer accepted while your house is still on the market, then you leave yourself wide open to being gazumped. The majority of sellers aren’t going to hang around for you to sell your house if another offer comes in, unless your offer is too good to refuse. But even in this instance, from their point of view, there’s still a risk you might pull out and leave them back at square one, so nine times out of ten they’ll probably go with the buyer who can move quickest if the price is right.
What shouldn’t I fix when selling a house?
Anything cosmetic can generally be left as it is. Most buyers will want to redecorate and personalise the house anyway, so it doesn’t make sense to waste your time and money decorating if you’re not going to see the benefits. And any difference it makes in price would be completely minimal. Even some bigger jobs like a new boiler or electrical sockets can probably be left, as they’re unlikely to be worth the ROI.
Should I use a ‘fast buyer’ company to speed up my sale?
If you’re already in the process of selling and you’re not in an urgent rush, then you should probably hold fire. Fast buying companies are ideal for some homeowners but not all, so unless you have a pressing need to have a sale go through quickly then it’s probably a good idea to carry on as you were.
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