Analysis by home selling experts, Open Property Group, reveals how sellers can benefit from the speed and efficiency of a cash buyer without having to accept a lower price.
Selling your home to a cash buyer is a good way of achieving a speedy sale. Cash buyers do not depend on a successful mortgage application, and they’re not tied to a chain which means that the successful sale of your property is not directly dependent on the successful sale of another – a situation which can cause fall-throughs and lengthy delays.
However, because they come to the table with this promise of speed, cash buyers are often in a strong negotiating position from which they can force the seller down on price.
In fact, Open Property Group’s analysis of UK House Price Index data* shows that cash buyers in Britain achieve an average discount of 8.1% compared to buyers who are using a mortgage. This is equivalent to an average price reduction of £22,711.
But what if you need a fast sale yet cannot afford to sell your home at such a heavily discounted price?
One possible answer is to sell to a reputable, professional company that specialises in cash buying.
In fact, further analysis from Open Property Group shows that their customers are able to offload their properties in a fraction of the time it takes with an estate agent, while pocketing almost exactly the same amount of money.
The typical selling timeframe when using an estate agent is between five and six months. This can, of course, extend indefinitely if no buyers are found. With a professional cash buying company, however, sales take between one and four weeks.
If a property is valued at £100,000, an estate agent will, on average, achieve roughly 95% of this, equivalent to £95,000. After additional survey expenses, this often falls to £90,000.
Meanwhile, a cash buying company such as Open Property Group will offer to buy the property at an average of 20% below the valuation which, in this example, is equivalent to £80,000.
While the £10,000 difference here seems like a substantial loss for the seller, you’ve first got to take into account the additional fees involved with selling on the open market:
The estate agent will charge VAT which averages £400. Solicitor and transactional fees will come to around £1,500 while mortgage interest payments average £1,800. On top of this you’re looking at a further £1,200 for utility bills and council tax while waiting for the sale to complete, and another £1,000 spent on cosmetic repairs made to the property in order to secure a buyer.
All of this considered, for a £100,000 asking price, the seller is pocketing an average of £81,100 and waiting around six months to complete.
When selling to a professional cash buyer, none of the above fees are necessary. So the seller is pocketing the full £80,000 offered, and completing within as little as a week.
Therefore, the seller is essentially paying just £1,100 in order to slash their selling timeline to 7 to 28 days from five to six months.
What is the process of selling to a professional cash buying company?
- Find a reputable company and request a valuation of your property. It is absolutely essential to choose a company that is a member of the National Association of Property Buyers (NAPB) meaning they will be registered with The Property Ombudsman (TPOS) and follow its Code of Conduct.
- Agree an offer – this will typically come to 80% of the valuation.
- Sit back – a good cash buyer company will handle everything for you from here on out, including completing all of the necessary paperwork and conveyancing processes (if required).
- Completion – a good cash buyer company will then complete the purchase and deliver the funds to your account within one month.
CEO of Open Property Group, Jason Harris-Cohen, commented:
“Sometimes, achieving a speedy sale is of utmost importance, not least if you’re relocating for work or moving to a new town and need to be in-situ in time to apply for school places. In such cases, cash buyers can be a godsend.
However, cash buyers have a strong hand – they know the value they offer by being prepared to make a quick purchase – and as such often demand significant discounts on the asking price. Often, buyers are not prepared to, or simply cannot afford to accept this discounted offer. Professional cash buying companies such as Open Property Group exist to help solve exactly this sort of situation.
Cash buying companies have long been looked at with a sceptical eye. Sometimes considered untrustworthy, unreliable, and dishonest. That’s because there are certain companies out there who do indeed act in underhand ways. Thankfully, the good ones are easy to spot because they are signed up to specialist organisations who enforce strict practice guidelines and offer oversight to ensure that all transactions are handled honestly, openly, and professionally.”