Are the claims and promises made by cash house buyers realistic or taking the biscuit?
Like any other, the quick house sale industry relies on marketing and advertising to sell their wares. Sometimes to stand out from the competition, businesses make claims that are at best unrealistic, and at worst, untrue. We explore some of these claims and promise to help house sellers make an informed decision and enter into a quick sale service with their eyes wide open.
The claims and promises
#1. Cash sale 24 hrs sell in 7 days.
Many quick sale firms claim you can ‘sell your house fast – in as little as 24 hours or seven days. The truth is, for most homeowners, that’s not attractive, nor is it practical. The idea of agreeing to a sale (at an acceptable price) and then moving out, all within 24 hours to 7 days, is probably more of a negative for most house sellers. However, it does mean that the quick sale firms are prepared to move fast to do a deal to help a seller move on by cutting the sales process down considerably.
#2. Stress and hassle-free.
It is also true that quick sale firms can move fast because they have the funds available to do so, no waiting for mortgage approval. They can also speed things up because they use their legal experts primed to push the sale through as quickly as possible. Add to that there are no viewings, negotiations etc., none of the hassle usually associated with selling a house.
#3. We buy any condition.
It’s also true that quick sale firms will buy almost anything, even a prefabricated house or one with a short lease; the types of property not normally mortgageable or attractive to ordinary homebuyers. However, they’ll do so at a cost. They don’t need to negotiate. They can take or leave it, so don’t expect a good deal if your home is unattractive.
#4. We buy anywhere.
Quick sale firms promise to buy any house anywhere in the UK. But the reality is that most aren’t interested in Scotland or Northern Ireland properties. Scotland may be unattractive because of the location, slow house price growth, less opportunity to make money on a quick resale. And then there is the legal system for buying and selling houses whereby an offer is binding, whereas, in England or Wales, quick sale firms can back out anytime. Northern Ireland is unattractive to UK quick sale firms, poor growth in house prices, and the distance involved in managing purchases and resales more often than not involving some degree of improvements.
Another restriction is the purchase price. Many quick sale firms won’t buy property over a certain value, say £500,000, but they won’t always tell you that. The reason is that the higher the property value, the more money has to be tied up and the longer it takes for reselling. Buying and selling cheaper properties allows quick sale firms to make more money with a quicker turnover.
#5. Sell for cash.
Obviously, quick sale firms don’t turn up with a suitcase full of cash to buy your home, and basic money laundering regulations wouldn’t allow it. They mean that they are not reliant on applying for a mortgage and going through an assessment process (income, expenditure, references, etc.), inevitably leading to delays, etc.
#6. We are cash buyers.
As in #5. above, there is rarely such a thing as a cash buyer in the buying and selling property in the UK. Technically it’s possible but impractical. Money laundering regulations apply to any large sums of money changing hands. In the context of quick sale firms promises, a cash buyer refers to someone not reliant on selling another property to buy yours. Most quick sale firms have readily available funds to buy as many below-market value properties as they can find.
#7 We pay up to 95/100% market value.
The first advert (screenshot 26.11.2021) states, ‘we can get up to 100% market value’, and that statement could be true, but what does the statement mean?
Here are several interpretations:
- The property buying firm can receive up to 100% market value when reselling your house.
- They are not buying your home but acting as estate agents and getting you a higher than the normal price.
- They are downvaluing your home and offering you up to 100% of the reduced valuation equating to 80/85% of market value.
- The statement is absolutely correct, but the 100% figure gets your attention, but they never give 100% of the market value.
- They pay 95/100% of the market value and operate on much smaller margins than similar quick sale firms.
Of course, we don’t know the correct position, 1, 2, 3, 4 or 5, or maybe none of them apply, and, technically, any property buying firm can give you 95% or 100% of the market value of your home, but if they did, they wouldn’t make any money and soon be out of business.
The second advert (screenshot 26.11.2021) confirms that the property buyer pays 90% of the market value. Is this realistic? How often do they pay 90% of the market value for a property? Can they operate their business on smaller margins than other property buying firms? Who knows? The market value from an estate agent to sell your home in 6 months is different from the market value for a distressed sale in 7 days. Therefore it is perfectly reasonable to use either interpretation depending on the selling timeframe.
Our tip is that if something sounds too good to be true, it probably is. Therefore, please read the complete guide to selling your home fast, starting here, and do your homework before selling your biggest asset without fully knowing the facts.