There is no doubt that the Internet has changed the property market, creating more options and competition for houses. Consequently, many homeowners are now looking towards property investors, willing to pay cash, as a means of avoiding lengthy transaction chains. The question, how do I sell my house to an investor is more common than ever before. Here at Cash House, we will connect you with investors looking to purchase different types of homes up and down the country.
How quickly can I sell my house to an investor?
The process is simple; complete our online questionnaire for an indicative offer on your home. If your property qualifies for our sell house fast cash service, we will arrange a professional surveyor to visit your property. They will formalise our offer, and then we will connect you with one of our many investment partners. We can instruct specialised solicitors to act on your behalf with the aim of a speedy exchange of contracts and completion date to suit you.
How to find property investors
As we touched on above, the Internet has had a significant impact on all areas of business, including the property sector. Here at Cash House, we can connect property sellers with property investors and assist with the quick settlement of transactions. Our growing relationship with investors means that we know who to approach when different property types become available.
What attracts property investors?
How do I sell my house to an investor is a common question prospective clients ask us. At this point, we must lay to rest several misunderstandings/misconceptions. Many homeowners automatically assume that property investors are looking for prestige and perfect investment opportunities. In reality, we have relationships with property investors looking for a vast range of different assets. These include:-
Repair/update and resell
Some property investors are simply looking to increase their cash flow by building up a portfolio of rental properties. This is a type of passive investment while others may be more active in repairing, developing existing homes and reselling. Consequently, there will likely be an interested investor for most homes.
Advantages and disadvantages of selling your house to an investor
We will now look at the advantages and disadvantages of selling your house to a property investor. While there are apparent benefits to selling your home in this manner, there are some issues. Even though you will be dealing directly with the investor, it is vital to take professional advice and appoint legal representatives to protect your interests. Unfortunately, in the past, we have seen fraudsters and scammers targeting the industry to the detriment of sellers. We will advise you and ensure that your interests are protected at all times and ensure the sale is completed as quickly as possible.
Advantages of selling your house to an investor
When considering selling directly to a property investor, your mind will probably be working overtime concerning the advantages. There are many apparent advantages, but there are others that may not have crossed your mind. We will now take a look at the benefits of selling your house to an investor.
When selling a home via the traditional estate agency route, you will probably feel under pressure to carry out a degree of maintenance and repair. The idea is simple, make your property as attractive as possible to potential buyers, thereby maximising the sale price. At this point, it is essential to recognise the difference between prospective buyers. Someone looking to acquire your home as their “dream home” will have a very different view from an investor. They won’t be living in the property, and are unlikely to be concerned whether the kitchen or bathroom has been updated recently.
As we touched on above, many property investors welcome the opportunity to acquire homes where improvements can be made. This can provide additional mark-up on the property value and an enhanced profit margin if they are looking for a quick sale. Consequently, the seller can save a significant amount of money by not carrying out potentially expensive maintenance and repairs. This will be reflected in the offer price.
Where several parties are involved in a transaction, there is greater potential for delays to completion. For example, even when a potential buyer can prearrange mortgage finance, this is not guaranteed. We have seen numerous occasions where mortgage finance has been withdrawn at the last minute, leaving the potential buyer unable to complete. In a best-case scenario, they would need to approach another mortgage provider and then go through the whole process again. More time and expense!
Where a potential buyer has cash available on deposit, it is simply a case of agreeing on the price and completing the paperwork. Access to liquid funds takes out a whole layer of administration and potential delays. Cash is and always will be King in the world of investment.
Completion in a matter of weeks, not months
The ability to deal directly with a potential buyer not only cuts out expensive third parties but also slashes the transaction time. On average, cash buyers will complete anywhere between 2 to 3 weeks after the sale price has been agreed. This compares to traditional estate agency property sales, where the average sale time is around nine months. Yes, nine months!
On a note of caution, it is essential not to cut any corners concerning legal representation and protecting your interests. This applies to both the buyer and the seller.
It is only when you go through the process of selling a property by the traditional route that you see the full array of transaction costs. These include:-
These costs alone can add up to thousands of pounds and reduce your net sale proceeds. However, there is also one additional cost which many people fail to consider when looking at ways to sell their property. Mortgage interest payments can certainly add up over nine months, as well as the additional funding for capital repayments. If you are already struggling to meet your mortgage payments, hence why you are looking for a fast sale, this can make a difficult situation even worse.
As we will cover later, many cash investors will look to acquire property at a discount to the market value. On paper, it seems more attractive to go down the traditional route, but this can look very different once all additional costs have been taken into account.
Unfortunately, many people find themselves in financial difficulties and unable to keep up with their mortgage payments. Consequently, a fast sale of their home can keep the mortgage company at bay and avert any additional financial pressures in the future. Avoiding foreclosure is also a way of maintaining a degree of control over the sale of your home. In the event of a foreclosure, the mortgage company would simply sell the property as quickly as possible, often at a significant discount to the market price.
Where you still have an outstanding mortgage, the mortgage company will hold the deeds to the property and would need to agree to a sale. However, if your financial situation were worsening, they would likely be relieved that you were being proactive rather than reactive.
No lengthy transaction chains
It is estimated that just 10% of property transactions in the United Kingdom do not involve a property chain. A property chain is best described as several property sales/purchases which are conditional on other transactions. It is not uncommon to have 4, 5 or more people in a property chain. If one link fails, all transactions are thrown into doubt.
For example, we have party A acquiring property from party B. Party B is acquiring property from party C but requires the funds from party A to conclude the purchase. Party C is acquiring property from party D but requires the funds from party B to complete. So, if party A were to withdraw from the proposed purchase from party B, this would bring the whole chain crashing down.
There is no chain where you are negotiating a cash sale of your property, which slashes the potential transaction time. It is essential to obtain proof of funds relatively early when looking to sell to a property investor, but this should not be an issue.
Disadvantages of selling your house to an investor
While it is easy to see the potential advantages of selling your house to a property investor, there are some disadvantages. However, looking at this in context, the potential drawbacks are significantly less than the potential advantages.
Buyers may look for a discount to market value
As you would expect, any property investor would be looking to negotiate the best price. The fact that they have cash in the bank, and can conclude the transaction relatively quickly, strengthens the buyer’s hand. That is not to say that a seller cannot attempt to negotiate an improvement on any offer, but much depends on their situation.
If the buyer knows that the seller is in financial trouble, they may offer a significantly lower price than the market value. The issue here is that the seller would probably need to go down the traditional estate agency route to obtain the market value. However, as we touched on above, there are significant costs and mortgage payments to cover. Therefore, it may be in the seller’s best interest to take the cash offer, even one less than the market value.
Some suggest that the average discount for a cash buyer is between 20% and 25% of the market value. However, this isn’t always the case. It depends upon the seller’s specific scenario, the property and how quickly they require the cash. Furthermore, with interest rates so low, many cash buyers are looking to improve the return on their funds at this moment in time. Consequently, this can help to instil a degree of competition even amongst cash buyers.
No obligation to reveal buyers identity
When selling a property to an investor, there is no obligation on the buyer’s side to reveal the identity of the investor. Whether or not this is any of the seller’s business is debatable, but some people may prefer to know their identity. For example, you may be looking to sell your property to an investor and become a tenant. In this scenario, you would probably prefer to know who you are dealing with beforehand.
Not party to investor plans
While many property investors will acquire homes for cash to rent out and increase their rental income, there may be other reasons. Again, a property investor is under no obligation to disclose their plans for your home. These plans could include:-
Demolishing the house and building a new development
The land may be part of a larger development plan
Renovate and resell
Flip the property for a quick sale
Additional planning consent could increase the value of the property
It may be that you are not fully aware of the potential future value of your home and surrounding land. There may be development projects in the area which could positively impact the value. Property investors tend to mix in circles where rumours and counter rumours emerge regularly.
Looking at the broader picture
At first glance, cash offers up to 25% less than the market value may not necessarily seem attractive. That said, it is essential to look at the broader picture when asking why I should sell my house to an investor. The following figures perfectly illustrate how the wider picture can look very different:-
The headline cash offer is significantly less than the traditional sale method, but the net figure is higher after considering costs. If your home requires considerable maintenance and repair, this can be costly, with homebuyers unlikely to consider a substandard property. When it comes to property investors, they have no emotional attachment and see them as purely investment assets.
It is essential to take all aspects of traditional property and cash sales into account when looking how to sell my house to an investor. These include legal costs, agency fees, mortgage payments and the potential for additional repair and maintenance expenses. Thus, the initial headline figure may favour a traditional sale price, the net figure can tell a very different story. The timescale is also something to consider.
On occasion, the seller may be desperate for cash to tackle their financial difficulties. A potential nine-month timescale on a traditional property sale could exacerbate an already difficult financial situation. Even though a cash sale has the potential to slash transaction times and transaction costs, it is crucial that you still appoint legal representation to act on your behalf. You still need to ensure that the paperwork goes through correctly and the funds are available.