Welcome to this impartial guide to quick house sales. Some home sellers can benefit from selling their house fast, whether for financial or personal reasons. Having identified this need, many businesses now offer a quick house sale service to consumers, helping sellers to get a fast, easy, guaranteed sale. However, there are concerns that a minority of companies offering quick house sale services may employ unscrupulous business practices and take advantage of home sellers’ urgency to sell their house quickly.
We have created this website to provide an easy to understand online guide to explain to home owners how the process of a quick house sale works and to offer advice to sellers who may be considering using this type of service to sell their house quickly.
The quick house sale sector can be confusing for sellers, who may include those in vulnerable circumstances, such as those suffering from financial hardship and sometimes the elderly. Our aim is to help educate home owners so they can have the confidence to make an informed decision about whether or not to engage in a quick house sale.
What do we mean by a “quick house sale”?
We will begin by explaining here what is meant by the term “quick house sale”. In short, companies that offer to arrange quick house sales claim that they can sell a house much faster than a traditional estate agent could on the open market.
The benefit to a seller is that they should be able to sell their property in a short period of time and receive the funds from the sale much quicker than going down the conventional route of using a high street estate agency. This can be an attractive option for people who need the cash quickly or simply want to get rid of their property as soon as possible.
However, the downside to this arrangement is that, usually, the seller must agree to sell their property at a “below market value” price, such as 80% of the full market value. Sellers that are desperate for a fast sale typically forgo between 10% and 25% of their home’s market value, which can amount to tens of thousands of pounds in each case.
How common are quick house sales?
In the UK the quick house sale sector represents a tiny proportion of the housing market as a whole, making up only 0.5% to 1% of residential property transactions. However, based on an average quick sale price of £100,000, this still makes the sector worth around £0.5 billion to £0.9 billion.
Why do some people want a quick house sale?
Given that they are going to get a significantly lower price than their property is worth, it may seem odd that people would consider forgoing the use of a traditional estate agent in order to get a speedy sale. It may seem a better option to wait a while in order to get a higher price. However, there are still many circumstances where a seller might be looking for a fast sale. Here are some common reasons:
+ Getting rid of an unwanted inherited property.
+ Financial issues, such as mounting debts or the threat of repossession.
+ A forced move due to old age or bad health.
+ Relocation due to a new job.
+ Fixing a broken property chain.
+ The property has been on the market some time and has not sold through a traditional estate agent.
+ The property is hard to market. For example, it may require modernisation, have structural problems, have a short lease or be uninsurable.
Sellers in any of the above situations may be attracted by the promise of a fast sale. Some people have an urgent need to sell as soon as possible. Others have given up on trying to sell their property on the open market. Others simply want the reassurance and convenience of knowing the sale will be completed quickly. Another attraction is the promise of a guaranteed sale, which is particularly appealing to sellers whose property is hard to market.
The advantages of speed and certainty must be weighed up against the disadvantage of a lower selling price. Sellers need to look at all their options before deciding to accept a reduced price.
How do quick house sales providers make money?
There are several ways that businesses in the quick house sale sector make a profit:
Buying: Businesses who act as buyers buy houses directly from sellers.
+ Most buyers intend to resell the house as soon as possible, at a much higher price than they paid the seller.
+ Some buyers choose to rent out the property to receive a regular income and may then sell the property at a later date.
Brokering: Businesses who act as brokers introduce sellers to third party buyers and may be involved in helping to progress the sale. A broker may find a buyer from a list of buyers or investors looking to buy a house fast, or may advertise the property on the open market.
+ Some brokers charge a fee to the seller, while others charge a fee to the buyer.
+ Some brokers work as a broker to agree a sale price with the seller and a different purchase price with the buyer, and then pocket the difference between the two prices.
Lead Generation: Businesses who collect details of home sellers and pass these details, known as leads, on to quick house sale providers, are called lead generators.
Some companies act as lead generators and receive payment from the buyer or broker for each lead and/or a referral fee is a sale is made.
Some quick house sale businesses act as both buyers and brokers, buying some properties directly and brokering the sale of other properties. Lead generation businesses also sometimes act as brokers.
How does the quick house sale process work?
Buyers and Brokers: Regardless of whether a seller decides to deal with a business that acts as a buyer or a broker, the sale process up until exchange of contracts will be similar eg. initial contact, valuation and initial offer, survey and final offer. Different providers may offer extra or different services, so sellers should ask questions to be clear about the service they can expect before entering into any agreement.
Potential Delays: As with any property sale, delays can occur. For example, hold-ups may happen if a property is leasehold, if a broker needs to find a third party buyer or if a buyer needs to arrange finance. Quick house sale lead generators pass sellers’ details on to other providers and have little or no control over the purchase themselves. There seems to be more risk of delays with brokers who have to find a buyer willing to pay the offer price and in a position to act quickly, compared to providers who are buyers themselves.
Offer Prices: The initial offer price will be affected by the property’s condition and location. Additional factors may lead to a reduced final offer price, such as problems with a buyer’s finance or the results of a survey.
What concerns are there about the quick house sales sector?
Unfortunately, there are a minority of quick house sale providers that use dubious business practices that could disadvantage vulnerable sellers and may even be illegal. As well as exploiting sellers, these practices could be detrimental to the industry by potentially giving a bad name to fair and honest companies and deterring sellers who might be able to benefit from selling their house fast. The main areas of concern are:
Prices: Sometimes provides make last minute reductions to the agreed offer price, often without giving any reason and when the seller is financially committed. This suggests providers could exploit a seller’s situation in order to buy a house at a significantly reduced price. There are also concerns about providers making misleading claims about a property’s market value or the amount of discount relating to the sale.
Timescales – Sellers should question claims made on quick house sale websites and in marketing material about speedy completion times. Some providers give the impression that the fastest possible completion times (7 days)are the norm, instead of disclosing average timescales (3 -4 weeks) that are more realistic. They often provide no evidence to back up their claims and do not mention factors that might delay the process.
Exclusivity agreements: Sellers should be wary of providers that want them to sign a long exclusivity agreement. Sellers looking for a fast sale should ask why a quick house sale agreement should last much more than 4 weeks. Some agreements prevent a seller from selling to another buyer and have severe penalties for breach of contract. Sellers should be wary of tying themselves in to such a contract.
Hidden fees: Some providers have been criticised for a lack of clarity about their fees, such as a fee following a valuation in order for the sale to move forward. Sellers should ask for details of all fees they can expect to be charged.
The buyer: There is a lack of clarity with some providers about who is actually going to buy the property. Sellers should ask whether the company will buy the house, or find a buyer, or act as a lead generator and pass their details to someone else.
The buyer’s position: Some providers do not make clear whether a buyer is a cash buyer or whether they need to arrange finance. This could delay the process and would be a concern to sellers looking for a speedy sale. Sellers should also ask for evidence of a cash buyer so as not to be misled.