Selling A House For Cash: Is It A Good Idea?
A third of all house sales are done via a cash buyer, but are they a good idea for you? Find out below for more…
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Selling A House For Cash: Is It A Good Idea?
If you are wondering if selling to a cash buyer is a good idea in England and Wales — you are in the right place! In this article we will delve into all things cash house buyers.
What Is A Cash Buyer?
A cash buyer can finance their purchase of your property outright, with no requirement for a mortgage or loan. Technically speaking, a cash buyer should have enough money to buy your property at the time of offer.
Cash house buyers account for a third of the residential property sale market and are often a good choice for people struggling to sell on the open market or have hit unforeseen circumstances and need to sell quickly.
Is It Illegal To Sell A House For Cash?
It is an entirely legal process to sell your house for cash in the UK, but we recommend that if you choose this path, you choose a cash-buying company with excellent reviews and a reputable track record.
Should I Use A House Buying Company Or An Independent House Buyer?
As with all aspects of the property market, there can be high risk as some cash-buyers aren’t members of the National Association of Property Buyers (NAPB) or The Property Ombudsman (TPO), which help regulate the market and protect customers.
Obviously, we would recommend that you use neither and choose us instead! We can sell your house in a fraction of the time of a traditional estate agency and cover all your costs! We are also members of NAPB and TPO, ensuring that our level of customer satisfaction is excellent at all times.
Why Would Someone Sell A House For Cash?
Selling to a cash buyer is often seen as the fast-track way to sell your house, as there’s usually less paperwork, and you aren’t waiting on any property chains on the buyer’s side. There are many reasons why someone would want to sell their house for cash, but the process comes with high risk.
This is why in most cases, cash buyers will buy significantly below market value to renovate the building against the remaining value:
If someone tries to sell on the open market, occasionally buyers may be put off by a properties location as a mortgage lender can refuse to lend if the property is seen as undesirable or unsafe due to:
- Close to old or unsecure mines.
- Land with risk of a landslip.
- The property is a formal petrol station.
- The property is in a high-risk flood area.
- The area has a high crime rate.
- The site has previously been used for industrial purposes.
A property can put potential buyers off if revealed as damaged in any surveys. Damaged properties can come in many different forms, like Japanese Knotweed, Dampness and Structural Issues:
What Is Japanese Knotweed?
Japanese Knotweed is an unstable, rapidly spreading weed that can grow through solid ground and disrupt house foundations. Mortgage providers will not lend on a property that has Japanese Knotweed.
What Are Structural Issues In A Property?
Structural issues like roof damage, subsidence or severe dampness can lead to a need for serious investment which is why these properties are often sold to cash buyers below market value. This will allow cash buyers to spend the remainder of the weight on the property’s renovation.
Houses built before 1960 are often classified as older buildings, older than 1914, and will be listed property. Most older buildings are the preferred choice for cash buyers because they have deteriorated conditions or the energy efficiency is significantly below the norm, meaning they can buy below market value.
By selling to a cash buyer, you can sell your property for between 7 days and multiple weeks — depending on the company’s professional service.
Selling to a cash buyer may be a great way if someone needs to sell their property quickly, like to stop a repossession.
What Types Of Vendors Seek A Cash Buyer?
A vendor can be a person or company offering a house for sale, and usually, when it comes to obtaining a mortgage, using a cash buyer can be one of the best routes to purchase.
Here are some of the main reasons why cash buyers affect mortgage decisions:
This is why in most cases, cash buyers will buy significantly below market value to renovate the building against the remaining value:
A mortgage lender will not agree to lend any money until they can confirm that the property is sound and that the borrower can meet their repayment obligations — which is quite time-consuming.
Usually, a cash buyer already has the funds available at the point of offer, removing the need to wait on a mortgage.
Legal mortgage providers cannot offer a mortgage to a borrower they don’t trust to make the mortgage payments. When a mortgage lender turns a potential buyer down, vendors face a conundrum: they must put their property back on the market.
This is why vendors tend to use cash buyers for the purchase of their homes as they attempt to avoid a broken property chain.
What Is The Process For Selling Your House For Cash?
The process of selling a home to a cash buyer is similar to the traditional route of selling a property without the need for arranging a mortgage. The sale process is often favoured due to its quick house sale approach.
The actual procedure will depend on the company or cash buyer you decide to use, but here is a general guide:
Most online cash buyers have a website where you can sign up and fill out a few forms. Alternatively, if you choose an independent cash buyer, they may have a phone number to ring.
We recommend constantly checking their Google or TrustPilot reviews to get an accurate and recent overview of the companies and help you avoid scams.
Most cash buyers will then offer you a cash offer for your property based on statistics and their own going rates. They should usually be below market value, but some companies will give you market value and then reduce the costs later — sneaky!
At this stage, you must ask for proof that they are a genuine cash buyer and have the funds in the bank to pay for your property via a bank financial statement. If the buyer cannot prove they have the funds in the bank, they are not a cash buyer.
Once you have accepted your offer, a cash buyer should then visit your property and be able to inspect the property and undertake a property valuation — finalising your offer.
Although cash buyers do not need a mortgage valuation survey, they may still opt to have a survey completed; this will usually be covered for you or part of a package.
If a cash buyer does not opt for a survey, this can be seen as a red flag, as when problems arise later down the line, they will try to reduce the purchase price.
Depending on the cash buyer, you will either have to instruct your solicitors or the cash buyer will handle this for you. The solicitors will arrange searches and professional valuations of your property.
The searches of your property will include a Local Area Search, Regulated Drainage and Water Search and Land Registry Title Plan.
Once all the legal work has been completed, you can look to exchange contracts. This is the point at which the process becomes legally binding. Again, depending on the cash buyer, you may also be able to complete it at this stage, although most like doing it on a timescale that suits them.
Questions For Genuine Cash Buyers
If you decide you want to risk it and sell your property via cash house buying company then here are some questions you can ask to ensure they buy your house smoothly:
Genuine cash buyers will be able to provide you with proof of funds — legitimate house buying companies should be aware of this concern and factor it into their service. Proof could be provided either as a bank statement or solicitor’s letter.
Genuine cash buyers will know exactly what kind of properties they are looking for, they will often have investors or themselves who specialise in a certain type of building. If your cash buyer is uncertain then this could be seen as a red flag.
Some non-genuine cash buyers will buy property on behalf of third parties so it’s important to check that you aren’t signing an option agreement. This will tie you into working with the company for a specific amount of time.
Although, this rule doesn’t apply if the cash buying is buying property for another branch of its company.
A genuine cash buyer will have a thorough understanding and process to buying your property as they will have a proven track record. If the cash buyer you are enquiring with does not have a process in mind then this should be flagged as a possible scam.
Most reputable property selling and buying companies will be members of professional bodies like the National Association of Property Buyers and The Property Ombudsman which help regulate the customer service experience of cash buyers.
If you don’t want to bother with the risk of a cash buyer and want a smooth, hassle-free house sale for almost full market value then get in touch today!
Is It Better To Sell Your House To A Cash Buyer?
It depends on your situation and timeframe. If you are in desperate need of cash to stop a financial crisis like repossession or divorce, then using a cash buyer can be a viable option.
But, you must know that a cash buyer will buy your home for Below-market-Value, up to 25%, depending on the cash buyer. Some cash buyers will slam you with additional packages, which are necessary for selling your property.
Is It Good To Sell A House For Cash?
Selling a house for cash can be good in some circumstances. The majority of people who benefit from a cash sale are often:
Selling a house for cash means that people can receive access to money and fast to clear their debt or arrears. This is done by a fast house sale allowing the seller to withdraw their equity and cover their debt.
Selling a probate or inherited property can be extremely overwhelming, but selling to a cash buyer can ease the process by speeding up the process.
Some people undergoing or have just gone through a divorce may want to sell their homes and move on positively. Cash buyers can aid in this by providing a faster-than-average sale.
Are There Any Disadvantages To Selling My House For Cash?
There are plenty of disadvantages to selling your house fast, especially when you compare the services to a company like ours.
The main issue with selling a house for cash is that you will be dealing it below market value — with some property cash buyers, this can be up to 25% of your home. That’s a significant mark on the value you will receive. If you sold your house with us, you would receive the total selling price of your property.
Some cash buyers drive such a hard bargain on your property because they take advantage of your situation. Which is partly due to the fact that cash buyers are not regulated like estate agents.
We recommend that you ensure the cash buyers are members of the TPO or NAPB and you look at their online reviews to catch any scams. We will work with you on a timescale that suits your needs to ensure you are looked after at every step.
Gazundering is a massive issue in unregulated cash buyers as they reduce their offer on your property right at the last minute, which will force you to accept the lower sale price or pull out the deal altogether.
Cash sales can still fall through, like most other avenues to selling. Usually, they can fall through when the survey reveals problems in your property. Instead of dropping out of the sale, we will help you find a new buyer specialising in problematic properties — also, surveys are on us!
One of the cash buyers’ most prominent attractions, it’s faster-than-normal sale can also be one of its flaws. We agree that in some circumstances, like a repossession or financial emergencies, this can come into clutch, but on the whole, most cash-buyers aren’t faster than us.
Unlike most cash buyers we will also help you buy properties as an onwards purchase. We have hundreds of properties available on our database so we can help you buy another property without all the hassle of using traditional estate agents.
We can buy your property in as little as 28 days and cover all the costs usually associated with selling your house, from surveys to marketing. If you can afford to spend slightly longer with us, you could gain up to 25% more than you would have got with a cash buyer.
