Looking to sell your property fast but not sure who to trust? Complete our contact form
Looking to sell your property fast but not sure who to trust? Complete our contact form
Everything You Need To Know:
The cash homebuying market gives homeowners an alternative way of selling their home that is fast, convenient and largely hassle-free. It comes with none of the stress and expense of preparing your home for sale, none of the arduous viewings, and none of the waiting around for months for the sale to complete.
It’s a great service in the right circumstances, but of course, it does come with a cost. Cash homebuyers will take your home off your hands in just a few short weeks, but this speed and simplicity will mean that you get less for your home than you would through a traditional sale on the open market.
But how much less should you expect for your home and how much do cash homebuyers pay at the end of the day?
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In this article, we’ll take a look at what is a good offer from a cash homebuyer. We’ll explain why you might get a little less than this, why you’ll almost never get more, and why you should be very wary of companies who are offering you what appears to be a very generous deal.
A fair and reasonable offer from a cash homebuyer is 80% of the realistic market value of your home. (We’ll explain what ‘realistic market value’ means a little later). That means you will be sacrificing 20% of the value of your home in exchange for a swift and straightforward sale.
With the average UK house price currently around £282,000, that’s around over £50,000, which is a lot of money for anyone to give up. Clearly this is not a good deal for many people, and if you are not in a hurry to sell, then it’s probably not the right deal for you.
However, if you’re struggling financially, or even facing repossession of your home by your bank or building society, then a fast cash sale could be exactly what you need. Even with the 20% drop in price, you’re still likely to get more for your home than if the bank take it from you and sell it themselves, especially with all the legal costs of repossession thrown in.
A quick cash sale can also be worth the money if you want to get your divorce over and done with, or if you and your siblings want to get your inheritance sooner rather than later. For some home sellers, a quick cash sale is worth it just to avoid the long, drawn-out pantomime of selling a house, which can take six months or more.
With a quick cash sale, you could have your money in the bank, and your creditors or siblings off your back, in just a few weeks.
When thinking about how much do cash homebuyers pay for your home, it’s worth bearing in mind that the price reduction is the only cost that you’ll have to pay. With a legitimate cash homebuyer, there are no additional fees, and most will agree to pay your legal fees as part of the deal.
If you sell on the open market, there are many additional costs that you won’t have with a quick cash sale, including:
Repairs, renovations and redecorating – unless your home is immaculate, you will inevitably need to spend some money making it ready for sale. A cash buyer will buy your home ‘as is’, so you won’t have to spend time and money making it market ready, which can be tough if you are already struggling.
Estate agency fees – you will have to pay your estate agent between 1% and 3% to sell your home, plus VAT on these charges. On the average home, this alone can cost you anything from £3,384 to £10,152. With a cash buyer there are no estate agency fees to pay because you have already found your buyer.
Legal fees – you can expect to pay the best part of £1000 for your conveyancing when you sell on the open market. A cash buyer will usually pay your legal fees for you.
Ongoing costs – the longer your sale takes, the more it will cost you to stay in your home. Council tax, maintenance, fuel bills, home insurance and mortgage repayments can quickly add up. And if you’re in debt, the interest will be rising all the time, costing you more and more with every passing day. With a quick cash sale you can put an end to these costs in just a few weeks, rather than having to endure them for half a year or more.
Add up all the additional costs of a slow sale on the open market, and suddenly that cash homebuyer’s offer doesn’t seem so low after all. And that’s before you factor in the cost of your time and energy in selling your home, or the emotional and mental health costs of being stuck with a home you can’t seem to sell for month after month.
As we said earlier, how much a cash buyer pays for your home will be based on the ‘realistic market value’ of your home. This is what you would actually get for it via a traditional sale, not what your estate agent says it’s worth when they first view it.
Estate agency is a hugely competitive business, and every firm wants your home on their books. This means that agents will often tell you exactly what you want to hear, even if it’s pure fantasy. They’ll often overvalue your home in order to impress you, even though they know that it is never, ever going to sell for as much as that. They may well get your business, but you’ll never get that asking price.
If we’re honest, we all over-value our homes when we go to market, just to see if we can get away with it. We pitch high, the buyers offer low and a compromise is reached somewhere in the middle. It’s a familiar game, and everyone knows the rules.
The game makes your buyers feel good because they have ‘talked you into a discount’ and you have a wry smile knowing you would’ve probably gone a little lower if they’d pushed you. It’s a crazy way of doing things, but it makes everyone feel like they’re getting a great deal. No harm, no foul.
However, what this also means is that these type of compromises and cuts are baked-in to the initial asking price, and most sellers don’t expect to get everything they’re asking for. It’s not so much a ‘realistic market value’ as an optimistic asking price.
Even after going round and round with your buyers to agree a price, the actual price you get for your home is often reduced further following the survey. No survey is perfect, and they will always throw up a couple of problems that need sorting out. Inevitably, your buyers will ask you to contribute towards any work that needs doing.
This is why we talk about 80% of the ‘realistic market value’, not 80% of your current asking price or 80% of what Bob down the pub says it’s worth. A genuine cash homebuyer will make an offer based on what they think you would actually get for your home when all the bartering and haggling is done and dusted and the deal is signed.
While it’s important to understand the realistic market value of your home so you don’t over-value it, it’s just as important that you don’t get ripped off by an unreasonably low valuation.
A common trick with less reputable cash house buyers is to offer a dazzlingly high headline percentage, but then undervalue your home to compensate. This way they can make their offers look very competitive, while actually offering you less.
Your cash homebuyer will use local estate agents to value your home, as well as considering a number of other factors that affect its value, both now and in the time it takes to sell it on. By choosing an experienced cash homebuyer, who has bought and sold a number of properties, you’ll get the most realistic valuation for your home.
To get an idea the realistic market value of your home, you can also speak to a local estate agent. Remember to ask them for what your home is actually worth, not what they would put it on the market for.
A 20% discount, amounting to £50,000 or more might feel like an extortionate amount of money to lose just to sell your home fast. Like we said at the start, this deal is not right for everybody, or even right for the vast majority of people. However, the offer is not as greedy as it might seem, especially when you consider the costs involved in a fast home sale.
Earlier in this article, we discussed the costs of selling your home. For cash homebuyers there are similar costs involved in buying it, and more costs when they come to sell it on. What’s more, as a company, a cash homebuyer has additional expenses to pay for.
How much a cash buyer pays for your home has to take these costs into account. For a start, they not only have to pay standard Stamp Duty on their purchase, like any other buyer, but they also have to pay an additional duty as a limited company. This adds an extra 3% of the purchase price to the cost.
A cash homebuyer will also have to pay not one, but three sets of solicitors fees. They pay for the fees when they buy your home, they pay again when they sell it on, and they will normally pay your legal fees too.
Once they’ve bought your home from you, they then have all of the usual costs of running it until they sell, with added costs of security if the property is empty and heating to control damp. They will also have to employ someone local to check on the property to make sure that it doesn’t get vandalised, and to keep out those hard to shift squatters.
In addition to all of the above costs, the company will have expenses of its own. They will need to pay staff, rent offices, pay bills and invest in computers, phones and websites. They also need to pay for marketing to get your attention in the first place.
On top of this, they have to cover the costs of talking to people and assessing homes where their deal is not accepted, and no money is made. If only one in ten people accepts their offer, that sale has to cover the cost of the other nine enquiries.
It’s important to remember that your cash homebuyer is running a business, not a charity. It’s not unreasonable for them to want to make a little profit along the way in exchange for helping you out of a difficult situation. If they’re not going to make any money, after covering their costs, then there’s no point in them buying your home in the first place.
Cash buyers also have to make an allowance for the risks involved in buying homes fast for cash. Without the time to do due diligence and thorough surveys and searches, a cash buyer is always taking a risk when buying a home fast. It’s just like when you buy on eBay. You expect to pay less than if you buy new from a shop, because you are taking a risk on what you will actually get.
In a volatile property market, there is always a risk that the value of a home will go down between the company buying it from you and selling it on. It only took Liz Truss 59 days to destroy the UK economy, and many cash buyers lost heavily as they watched their stock of homes plummet in value almost overnight.
Add up all of these costs and risks, and you’ll soon see that how much a cash buyer pays for your home is nothing like as little, or as greedy, as it first appears. If anything, their offers are a fair price to pay if you want, or need, a quick home sale.
There are some very specific circumstances under which a cash homebuyer can offer up to 85%. This is usually where a quirk in the law makes the property transaction exempt from Stamp Duty. These circumstances include:
Probate properties – where you have inherited the property that you wish to sell
Chain repair – where you use a cash buyer to fix a broken chain and get multiple people moving
Relocation for work purposes – under certain conditions, if you are moving for work purposes, your home may be exempt
With companies paying an extra 3% on top of the standard Stamp Duty, this can make a big difference. If any of these apply to your home, then your cash buyer may be able to offer you more, up to 85% of the realistic market value.
Not all cash homebuyers will pass this saving on, so it’s worth checking if your home qualifies for exemption to make sure you get the offer you deserve.
Check the websites of some cash homebuyers and you’ll find many offering much more than the standard 80%. You’ll often see up to 90% or occasionally even more than this being offered. So why shouldn’t you choose one of these deals?
The key word here is ‘offer’. A cash homebuyer can ‘offer’ you the world on a silver platter, but that’s not the same as actually giving it to you. Many companies will use a higher initial offer to tie you in, then find reasons to drop that offer at a later stage.
Some companies claw back the difference in hidden fees and expenses, while others simply revise their offer down, often at the last minute when it’s too late to start again. These companies will usually give themselves away by asking you to sign a contract, binding you to the sale.
This is one of the many reasons why you should never sign a contract with a cash homebuyer.
You can see from the expenses we outlined above that in most circumstances, any offer over 80% is just unrealistic. A cash homebuyer simply cannot afford to buy your house for more than that and still cover all of their costs.
So yes, you can get a cash offer above 80% from a fast homebuyer, but it is very unlikely that you will walk away with more than 80% when the contracts are signed, and you’ll often get much less.
A reputable cash homebuyer will make you a fair and realistic offer for your home, and most importantly, they will stick to that price and pay what they say.
How much do cash homebuyers pay is affected by the same sort of issues as any other homebuyer. If a traditional buyer, on the open market, finds a serious problem with your home, then they’ll expect a reduction to compensate for it. The same is true for cash homebuyers.
You may get a standard offer of 80% initially, but this will be revised downwards if they investigate further and find major problems. These are usually the kind of issues that would make it difficult for potential buyers to get a mortgage, such as:
Non-traditional construction
Subsidence or mineshaft issues
Your cash homebuyer shouldn’t need a mortgage to buy your home, but the people they want to sell it on to might, and so to get the full 80%, it needs to be mortgage worthy.
That’s the million-dollar question – or in this case, the £50,000 question. One way of looking at it is that you get what you pay for. Let’s give you an example:
When it comes to decorating your home, you can either do it yourself or pay someone to do it for you. If you do it yourself, it will take a lot longer, and it will inevitably be more stressful and complex. You’ll still have to go out and buy equipment and materials, and the end result probably won’t look as good.
On the other hand, you can pay a professional to come and do your decorating for you. They will get the job done much quicker, without any stress or hassle on your part, and they’ll pay for all the tools and equipment. You’ll get a professional job done really quickly.
The same is true for cash homebuyers. How much a cash buyer pays for your home needs to be balanced with what you get for your money. If you have to sell fast, then their service is worth every penny. You get to clear your debts, or walk away from a failed relationship, and start again so much sooner.
Even if you don’t strictly need to sell fast, but you just can’t face the six months of stress, tyre-kicking viewers and endless haggling that comes with a traditional sale, it can still be a price worth paying.
Whether a cash deal is right for you or not depends on your individual circumstances, as much as it does on how much a cash homebuyer pays for a home. If you need to sell your home fast, choosing a legitimate cash home buyer is a quick and easy way to go. You’ll get a guaranteed sale at a fair price, with none of the stress or hassle of a traditional sale.
If you just want to sell fast, to get your inheritance or get rid of your ex, then how much a cash buyer pays for your home can still be a worthwhile trade-off. However, if there are no pressing reasons for selling your home fast, then how much a cash buyer pays for your home will probably not be enough.
Genuine, reputable cash homebuyers, such as those recommended by the Property Sale Watchdog, will always be happy to talk you through your options and advise you whether their offer is right for you. If they’re the real deal, then they won’t try to talk you into a quick cash home sale if it isn’t appropriate. If you feel any sales pressure, you should walk away.
If it is right, if you feel you can trust the company you are dealing with, and if you are happy with how much a cash buyer pays for your home, then you could have cash in your bank in just a few weeks – even if that is a little less than your home is worth
We hope this article has given you ample guidance on how much you can expect to get when it comes to selling your home to a cash home buyer.
We aim to arm you with as much knowledge as possible so that you feel better prepared for any eventuality. Remember – your financial health is important, but mental health must always come first.
Wherever you are in the process, make sure you talk to people regularly, whether it’s friends, family, trusted co-workers, or helpful agencies. Taking time away from dealing with phone calls and paperwork is crucial for clearing your mind, and keeping your sanity in tough times.
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