Is It Worth Selling Your House To A House Buying Company?

Cardboard Box with Red Ribbon Beside A Sale Sign

In recent years, companies that make quick cash offers to purchase homes have exploded in popularity across the UK. Often referred to as “house buying companies”, they pitch themselves as a convenient way to sell fast without the hassle of putting your property on the open market. But are these house buying companies truly offering homeowners a good deal?

This article will dive deep into the pros and cons of selling to an instant cash home buyer versus the traditional route of using an estate agent. We’ll analyse all the factors you should consider before opting for a quick house sale, helping you decide if it’s the best move for your situation. By the end, you’ll understand exactly when selling to a house buying company makes sense and when you may be better off selling through traditional methods.

How Do House Buying Companies Work?

Before weighing up the major advantages and downsides, it’s useful to understand exactly how these house buying firms operate compared to standard property sales.

House buying companies aim to purchase properties faster and more conveniently than regular buyers. They have cash ready to buy immediately, letting them make quick offers and complete sales rapidly. Speed and certainty are their key selling points.

But this convenience comes at a cost. Since these companies need to profit when reselling the home, they factor in fees and margins, offering sellers a significant discount compared to achieving full open market value. For sellers focused purely on fast cash and convenience, the discount may be worth paying.

Main Advantages Of Selling To A House Buying Company

  • Sell Fast Without Waiting for a Buyer
  • Avoid Open Market Risks and Uncertainty
  • Skip Agent Fees and Legal Costs
  • Cash Completion Without a Property Chain
  • Avoid Repairs, Cleaning and Viewings
  • Tax Implications Can Be Advantageous

Now let’s explore each of these potential benefits in more depth:

Sell Fast Without Waiting for a Buyer

The biggest lure of these house buying firms is that they can buy properties extremely quickly. There’s no need to wait months for the right buyer to come along. After making their offer based on a quick valuation, they can complete purchases in as little as 7-28 days. This unmatched speed and efficiency make them appealing to anyone needing to sell fast.

Avoid Open Market Risks and Uncertainty

Selling privately or via an estate agent has uncertainties around finding a buyer prepared to pay your desired price and being vulnerable if they withdraw last minute from the sale. By accepting a quick cash offer from an established large-scale buying company, the sale is guaranteed provided contracts get signed.

Skip Agent Fees and Legal Costs

You can expect to cut out on agent fees plus legal costs when selling through traditional methods. These expenses quickly eat into your sale proceeds. When you sell directly to a house buying firm and their in-house conveyancers handle the legal work, these substantial costs can be avoided.

Cash Completion Without a Property Chain

Battling through stressful property chains where you rely on the buyers of your home having sold their property can lead to protracted sales falling through. As cash buyers, house buying companies remove this completion risk – they have funds ready to exchange immediately.

Avoid Repairs, Cleaning and Viewings

Preparing a home for open market sale requires investing significant time, effort and money into sprucing up the property for viewings. As experienced large-scale buyers, these companies will purchase without needing repairs or perfect presentation.

Tax Implications Can Be Advantageous

Selling substantially under market value triggers less capital gains tax as the marginal gain is lower. Transaction fees being lower also means more net cash available after the taxman takes his share. From a pure tax perspective, a discount sale can optimise after-tax proceeds.

Key Situations When Selling To A House Buying Company Makes Sense

Given the complex set of upsides and drawbacks outlined above, should you consider selling to one of these companies? In what situations do the benefits outweigh the limitations?

While never suitable for all, sellers in the following circumstances often find selling this alternate route highly advantageous:

  • Need a Quick Sale for Urgent Cash
  • Relocating or Emigrating Quickly
  • Inherited Unwanted Property
  • Owe More than Property Worth
  • Poor Condition or Title Issues

Now let’s analyse why each of these seller situations tends to gain the most advantage from the fast sale option:

Need a Quick Sale for Urgent Cash

For those needing cash rapidly due to life events like job losses, emergency medical bills, surprise tax bills, debtor issues and so on, the ability to access sale funds in days rather than weeks or months could be a literal lifeline. In these urgent scenarios, accepting a large discount is worthwhile to resolve temporary cashflow issues quickly. You can potentially look to buy again when financially recovered.

Relocating or Emigrating Quickly

If you have a strict deadline looming to vacate a property due to emigrating overseas or needing to relocate for a new job, securing a guaranteed sale quickly gives vital peace of mind. Avoiding uncertainty over finding a normal buyer in time or battling through long completion chains removes massive stress when racing against the clock.

Inherited Unwanted Property

Many who suddenly inherit an unwanted buy-to-let or distant family property look to dispose of the asset quickly without fuss. Selling conveniently undervalue simply to exit an ongoing headache or legal complexity is often deemed sensible in these situations. It frees heirs from unwanted duties as landlord or arranging extensive renovations at personal expense.

Owe More than Property Worth

For homeowners in negative equity where their outstanding mortgage exceeds the current depressed market value, earning enough from a standard sale to settle the debt looks near impossible. By selling quickly at a discount to an investment buyer less sensitive to negative equity, full debt repayment becomes far more achievable. This appealing route out of negative equity traps many owners otherwise stuck helpless.

Poor Condition or Title Issues

Similarly, properties with substantial damage, defects and disrepair can cost a fortune to fix up for profitable resale. Long unresolved title disputes, access rights arguments, boundary confusion or planning permission wrangles put standard buyers off. Selling As-Is at a discount to a large cash investor capable and willing to eventually resolve the headaches for profit down the line starts to make practical sense.

Conclusion

While the sheer speed and convenience of house buying companies offer clear temptations, sellers without needing urgent liquidity should avoid succumbing to this false lure by accepting steep discounts. Except for specific circumstances like urgent deadline pressures or high risks around securing reliable sales, pursuing a strategic conventional selling approach almost always allows for maximising ultimate proceeds. Patience, effective marketing and faith in achieving fair value beats rashly snatching upfront lowball offers. Stay calculated in your decision-making – don’t jump hurriedly at the quick fix if it sacrifices your bottom line windfall substantially.

We are proud members of...

  • NAPB
  • RICS
  • The Property Ombudsman
  • Trading Standards

We are proud to be the most regulated property buyer operating in the ‘Quick House Sale’ industry. We are an active member of the NAPB (National Association Of Property Buyers) and are RICS regulated, which means you can have every confidence of selling your home with us quickly & easily.