When selling a property, homeowners have several choices. The most popular of these is putting the house on the market and waiting until someone comes along to buy it, hopefully at market value or above. However, this can be a slow and tedious process, one that may leave a seller more out of pocket than they’d like.

For those looking to make a speedier sale, going with a quick sale company is usually best. They typically take a property off a person’s hands within a matter of weeks, removing a lot of wasted time from the equation. How exactly do such companies make a profit, though?

Buying Below Market Value

If a quick sale company suggests it will buy a house at market value, you can almost guarantee that they’re lying. No legitimate company will pay that high because then they wouldn’t make money.

You can generally expect sales to be made at around 75-90% of the market value – any lower, and it might be a scam – with the price acting as compensation for the quick sale. If you don’t want to wait months for someone to make an offer on your home, selling at a discount is usually a reasonable compromise for a fast turnaround.

Obviously, if a quick sale company were to buy a house for 85% of its value and then sell it at its full value, it would ultimately make a profit. However, this isn’t the only way that such companies generate money.

Using An In-House Building Team

Plenty of homes that quick sale companies buy are fixer-uppers. That’s especially the case when selling to somewhere like Housebuyers4u, who will buy your home no matter what state it’s in. Part of their appeal is that they don’t discriminate when it comes to what they’re buying or who they’re buying from. Evidently, that’s great for the customer, but if the property requires a lot of renovation work, it can be a risky move from a profit standpoint.

One way that companies like HouseBuyers4u mitigate against this is by having in-house building teams who can conduct any renovation work for a fraction of the cost. By saving money on fixing up a property, they improve the chances of eventually selling it for a profit, especially if the improvements increase its market value.

Favouring Properties In Certain Areas

Multiple factors come together to establish a house’s market value. Obviously, this includes features present in the property itself, but it also takes the surrounding area into consideration. Quick sale companies will often use this to their advantage to maximise the return on investment and generate profit.

For instance, if they know that London homeowners like a certain feature, to the point that it increases a home market value by several percent, they’ll naturally include it in renovations. That same feature might not be as crucial somewhere like Birmingham, and so they forgo it in favour of improvements more suited to that region when buying a house there.

If it weren’t profitable for quick sale companies to buy homes the way they do, they obviously wouldn’t do it. Clearly, there’s money to be made in this line of work, and these insights show you where.

Sign up for regular property updates & receive investments in your inbox

Daniel Peacock.

Leave a Reply