Fast Cash Offers: The New Trend In The UK Property Market
The UK property market has seen some major shifts in recent years. One of the most notable new trends has been the rise of companies and investors making fast cash offers on properties. Often referred to as “cash home buyers”, these buyers aim to purchase properties quickly, usually below market value, and often pay the seller in cash within a matter of days.
For sellers who need to offload their property quickly, whether due to financial pressures, inheritance issues, or other life events, cash home buyers can seem like an attractive option compared to the traditional route of putting a house on the market. However, there are some important considerations around timing, value, and convenience that sellers should keep in mind when weighing up these fast cash offers.
Understanding Cash Home Buyers
Cash home buyers have become much more prominent across the UK in the last 5-10 years. They include both individual investors and companies. They aim to find discounted properties that they can purchase quickly for cash and later sell on or rent out for a profit.
Some of the leading cash home buyer companies actively advertise their services on TV, radio, and online. They promise fast sales, no estate agent fees, and the convenience of not having to prepare a property for sale. For sellers in tricky situations, this can understandably seem appealing.
Cash buyers typically purchase properties at below-market value. They can do this because they have funds readily available and do not require a mortgage. Their purchases are based primarily on the condition of the property and how quickly they can complete the sale.
How the Process Works
The process for selling to a cash home buyer is designed to be quick and hassle-free. It usually follows these key steps:
- Initial inquiry – The seller contacts the cash home buyer or responds to an advert. Basic property details are provided.
- Valuation – The buyer will do a desktop valuation based on property type, size, location, and condition. This is non-binding.
- Viewing – If interested, the buyer will schedule a viewing to assess the property’s condition.
- Offer – Within a few days, the buyer provides an offer in writing. This is usually below the market rate.
- Negotiation – There may be some negotiation around the price or inclusion of content.
- Legal work – If the offer is accepted, the buyer’s solicitor undertakes the legal work.
- Exchange & completion – With all legal checks satisfactory, contracts are exchanged and transactions are completed rapidly. Funds are transferred on completion.
- Handover – Buyer receives keys once funds have cleared. The seller vacates the property.
The emphasis is on speed and efficiency. From initial offer to completion can take as little as 7-28 days, compared to the traditional route which takes an average of 3 months or more. However, the key trade-off is price.
Why Choose a Cash Buyer?
For many homeowners dealing with specific circumstances, the quick sale, cash payment, and convenience of a cash buyer can be extremely appealing:
- Relocation – For those who have already moved or purchased a new home, a fast cash sale lets them quickly sell and release funds.
- Divorce – Cash buyers allow a clean break during the emotional and financial upheaval of divorce.
- Bereavement – Dealing with a property after the loss of a loved one can be difficult. A fast sale releases funds for beneficiaries.
- Financial difficulties – The cash funds from a quick sale allow debt repayment and reduced mortgage costs.
- Poor condition homes – Buyers will consider properties in any condition, ideal for rundown or uninhabitable homes.
- Chain-free sale – Cash buyers offer a chain-free, hassle-free sale with greater certainty of completion.
For these sellers, the convenience, speed and guaranteed buyer can offset the compromises on price and agent support. But cash sales won’t suit every seller’s specific needs.
Considerations Around Cash Offers
While cash buyer offers provide a quick solution, sellers should carefully consider the following factors before accepting:
Buying Chain Impact
If buyers have already committed to purchasing a new home, they need to be sure the cash offer will provide enough funds for their onward purchase. A shortfall could impact their buying chain. Bridging finance may help cover a gap in funds.
Future Price Growth
Properties have faced exceptional price growth recently. By selling quickly to a cash buyer, sellers lose out on any continued near-term growth. Their property’s future value could be much higher.
Estate Agent Advantages
Putting a property on the traditional market allows testing of full value via competitive bids. Good agents also handle viewings, marketing, negotiations and sales progression. Cash buyers place the onus on the seller.
Tax and Cost Implications
Depending on the seller’s circumstances, there may be capital gains, income or inheritance tax implications from offloading a property below market value. Advice should be sought.
Other fast sale options like online auctions may achieve a better price. Or if the timing is less critical, a traditional sale with an agent might maximise price.
Weighing up these factors will help sellers make the right choice. For some, a cash sale makes perfect sense despite the compromise on value.
Advantages of Cash Buyers for Sellers
While cash buyers don’t suit every seller’s interests, they can bring some key advantages when used in the right circumstances:
Speed The biggest benefit is speed. The process is designed to be quick, with sales possible in as little as 7 days. For sellers who have already purchased another property or urgently need funds, fast exchange and completion are a major plus.
Certainty With a cash buyer, the sale is not dependent on the buyer securing a mortgage, selling their own home or winning a bidding war. This provides greater certainty that the sale will be completed.
Cash Payment Settlement is in cash, either on completion or receipt of keys. For inheritors or executors, this quick liquidity from the property asset is helpful.
Flexible Timescales Cash buyers allow flexibility around timescales. If the seller needs more time before vacating, this can often be negotiated after the contract exchange.
No Estate Agent The seller does not need to prep the home for sale, host viewings or pay any estate agent fees. The buyer takes care of the whole process.
Any Property Condition Buyers will consider run-down or uninhabitable properties. Issues that are turnoffs for traditional buyers like dampness, mould and structural damage are not dealbreakers.
No Chain With a chain-free sale, there is less chance of the transaction falling through before completion. This provides security for sellers who have already purchased another home.
Inheritance and probate Executors can offload a property without needing to wait months for probate. Funds are released sooner for estate distribution.
Convenience For time-pressed sellers or those struggling with upkeep, convenience and hassle-free sales are a major advantage.
By weighing up the pros and cons, cash buyers can provide the right solution for sellers with specific circumstances or priorities around speed, convenience and certainty. Those who can compromise on value stand to benefit most. But a rushed decision could mean missing out on thousands of pounds.
How Sellers Can Get the Best Deal
While cash buyers aim to purchase properties below market value, there are ways sellers can still get the best price possible:
- Research buyers – There are large variations in the fee structures and purchase prices offered by different cash home buyer firms. Comparing deals ensures the best return.
- Consider options – Sellers should review all their options – traditional sale, sealed bids, auction etc – before committing to a cash sale.
- Get valuations – Getting 3 independent valuations gives a benchmark for price negotiation. Do not rely solely on the buyer’s assessment.
- Check online – Checking property listing websites provides a good gauge of current local sold prices for similar properties.
- Negotiate – There is often room for negotiation on the buyer’s initial offer. Sellers who negotiate reasonably but firmly are likely to secure an improved deal.
- Involve agents – Some cash buyers are willing to work with seller’s agents on negotiations. Their expertise can be invaluable.
- Attach value to contents – Including high-value contents like white goods in the deal adds to the overall price.
- Consider incentives – Some buyers may offer incentives like free legal fees to sweeten their offer.
With the right approach, sellers can still achieve a competitive price for their property while benefiting from the speed and convenience of a fast cash sale.
The rise of cash home buyers has created a new fast-sale option for UK property sellers. This route provides speed, convenience and certainty, but at the trade-off of achieving full market price. For inheritance, relocation and other specific needs, cash buyers present a viable solution. But for maximum value, the traditional estate agent approach remains advisable. Sellers should carefully assess their motivations before opting for a quick cash offer. With thorough research and skilful negotiation, competitive deals are still possible. While cash buyers are unlikely to fade away anytime soon, vendors who understand their pros, cons and alternatives will be best positioned to benefit.