n the last few years a new way to sell a house has become more common. That is to sell through a fast or cash house buying service. Here we’ll look at the pros and cons of this method of house selling.
How do fast cash house buying services work?
For many years pretty much the main way to sell a house has been to a private buyer (or perhaps an investor) through an estate agent. Yes, there have long been property auctions and a very few private sellers who tried to go it alone and sell their house themselves. But estate agents have had the main share of the house selling and buying market.
In recent years what are known as fast or cash house buying services have become very active in the market. While it’s unclear what sort of market share they have many of them appear to spend a great deal of money on TV, press and online advertising.
As their names suggest these companies offer to buy any house, buy houses for cash and to complete the transaction quickly.
These types of buyers work in different ways, however. Some of them are investors buying for their own investment portfolios. Some of them are probably looking to buy and sell or flip houses for a profit. Others are essentially agents arranging introductions to registered buyers.
The advantages of fast cash house buying services
Let’s look at what a few of the advantages of selling through these services might be.
It’s quick, or at least should be. You don’t have to wait to find a buyer and wait for the sale to go through. Most of these services say they can complete a sale in three weeks or so (some even in a matter of days). Generally it takes at least three months to complete a sale through an estate agent and can be much longer depending on the market.
Sellers don’t need to find an estate agent nor pay an estate agent’s fees. It seems simpler.
Sellers don’t need to deal with buyers, do viewings, negotiate etc. Again it seems simpler.
A sale is less likely to fall through, or at least should be. When selling to a genuine cash buyer there should be no chain, and no waiting for everyone in the chain to sell and complete their purchase before anyone can move.
There are often no fees. Many fast cash house buying services offer to cover all the legal fees within their price offer.
The disadvantages of fast cash house buying services
The main disadvantage of selling to a fast cash house buying service is that the seller almost certainly won’t get market value for their house. These kinds of buyers are looking to buy at a discount in order to return a profit for themselves as well as covering their costs.
As a general rule of thumb 80% under market value would be a good starting point. Some may pay a little more while others will look to pay less.
Another drawback to consider is that some fast cash buyers don’t have a great reputation. Not all are that fast, and not all actually have the cash waiting to buy with. There have been allegations that some of these buyers drag the transaction out before dropping their offer at the last moment. Some might try to tie sellers into a contract which is less than fair, or charge hidden fees.
So are fast cash house buying services a good thing?
There really is no easy answer here!
For a house seller who wants or needs the best price it’s generally better to sell in the conventional way through a good estate agent. They’ll advise on market value and a suitable asking price and hopefully generate competitive interest from several buyers to achieve the best selling price. Yes, it can be hard work and frustrating sometimes. It can take time and sales can fall through, but it should mean market value is achieved at the end of the day.
For a seller who wants to sell quickly, wants to avoid some of the pitfalls of a conventional sale, and is prepared to take a reduction on market value using such a company might be an option.
However, sellers considering using a fast cash house buying company should be aware of the cons as well as the pros before deciding. Ask an estate agent to advise on what market value could be achieved by selling through them and how long it is likely to take. Before using a fast cash buying service check to make sure they are reputable, read reviews and read any contract carefully before going ahead.