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HOUSES BOUGHT FOR CASH


Differences & Legals you Need to know Before Selling



 
In this article we will help you understand the key differences between a traditional property sale and a cash house sale. We will look at how the legals, process and timescale differs allowing you to make the right decision for your situation.
Also - all this information combined will provide you with enough knowledge not only to pick the best cash buyers but to also avoid the few unethical quick sale companies who are out there to scam you.
We will cover all of the following topics:
    1. How Does the House Conveyancing Process Change with a Cash Sale?
    2. Legal Protection for Traditional Sellers via Estate Agent
    3. What Protections do Sellers have When Selling to a Quick House Sale Company
    4. How Should your Approach Change When Selling for Cash Instead of a Estate Agent
    5. Checklist for Proceeding with a Quick Cash Sale
    6. Questions to Ask a Quick Buying Company
    7. Other Differences in the Cash Selling Process
    8. A Final Word: How the Stats Make House Buying Companies Competitive Alternatives

1) How Does the House Buying Process Change?


The traditional house buying process and the people involved
Typically, selling a home involves working with several different parties - the buyers, estate agents, mortgage lenders and conveyancing solicitors to name a few. However, suppose the interested buyer is a cash buyer? Does the process change when the mortgage is taken out of the equation?
Of course it does. When an interested buyer is paying with cash, estate agent’s valuations and its listing is surplus to requirements, as is a mortgage provider. As you can imagine, cash buying speeds up the process considerably and removes the chance of something going wrong in the house buying chain.
How a genuine cash buyer would buy your house in 3 steps
Typically, once you as a seller decide to accept an offer from a buyer you will find yourself inundated with documents to fill out which range from basic forms to complex paperwork issued by your solicitor for you to read, understand and then sign.
The same goes if you're a buying a house, once the paperwork has been completed for a proposed sale, the mortgage provider will arrange a homebuyer’s survey and valuation, as well as send off the formal requirements, transforming the mortgage into an offer.
Without proof of funds, the involved parties cannot exchange contracts, and the deal cannot be completed. However, getting an offer in writing can often take several weeks or longer during busy periods.
To summarise, when the loan is removed from the equation and a cash buyer is purchasing the property, a mortgage lender is no longer required. For this reason the conveyancing can be expedited as there are no external factors delaying the process.
In-all-likelihood, any sensible cash buyer is still going to want to check your property is structurally sound and establish a market value, but while conveyancing is still necessary, it shouldn’t take as long as it would if a mortgage provider is involved. As a matter of fact genuine cash buyers should have surveys done within 7 days at the most.

2) Legal Protection for Traditional Sellers vs Estate Agents


In the traditional house sale process estate agents, conveyancers, mortgage lenders and others have to follow certain rules. For example, when selling your home estate agents need to provide a legal contract that sets out the terms. If they fail to meet this you can take action.
Estate agents must be registered with one of the government’s two approved complaints redress schemes:
  • The Property Ombudsman
  • The Property Redress Scheme

Note: In Scotland only, most houses which are sold will be legally required to have a Home Report

3) What Protections do Homeowners have When Selling to a Quick House Sale Company?


It is worth noting that the quick house sale market is unregulated. Therefore, homeowners are not as protected when selling their properties for cash as when using an estate agent. This makes research vital to ensure you choose a good cash buyer.
However, cash home buying companies can register with The Property Ombudsman (TPOS). Once registered with TPOS, members are required to adhere to its Code of Practice. Going through a TPOS registered company enables homeowners to access its independent redress, should a dispute arise.
Below is a list of 2 other regulatory bodies quick house sale companies are encouraged to register to in order to boost credibility. The NAPB (National Association of Property Buyers) & Tradings Standards.
Which regulatory bodies should quick sale firms register with

4) How Should your Approach Change When Selling for Cash Instead of a Traditional Estate Agent?


The process is very different. Therefore your approach to the sale should be different too. When going through a traditional sale process you have guidance from estate agents, solicitors and mortgage advisors on valuations and the process.
When selling for cash there is more emphasis on you deciding if the deal is right for you and making checks that you are dealing with a reputable cash buyer.
When it comes to the best time of the year to sell to an estate agent there is significant evidence to suggest spring/summer time is the best time to sell. The same does not apply to house buying companies at all - they will buy your house at anytime of the year.
Here are the checks you should run and the process you should follow when selling your home for cash.

5) Checklist for Proceeding with a Quick House Sale


Checklist for before you proceed with a cash house sale
  • Check Credentials: Never use a broker (someone who connects you to prospective buyers) as they are simply trying to find a buyer and have no control. Many companies promote managed sales and assisted sales, which are decorated to make them look like it is different compared to an estate agent, but in reality are trying to find buyers and thus takes months with a high fall through rate.
  • Don't forget to negotiate: There is always some wiggle room, so don’t be afraid to negotiate the price and/or the terms.
  • Consider enlisting a quick sale company: Which has TPOS & NAPB accreditation.
  • Take your time: Don’t let your provider rush you or pressure you into a buying decision.
  • Get it in writing: Seems obvious, but you would be surprised.
  • Take care when reading the agreement: Never sign anything unless you fully understand it. If you aren’t sure about something, ask your legal advisor to clarify it for you. True cash buyers go direct to solicitors and thus you should never sign any documents with a company direct as you have no protection.
  • Don’t get tied in: Some quick sale companies may ask you to sign an agreement binding you to the company for longer than necessary. If they are asking you to do this, stay clear as they are a broker not a cash buyer.
  • Honesty is the best policy: Don’t give incorrect information or omit important details. At best, this will cause hold-ups, but it could lead to a reduction in price.
  • Don’t commit: Until you have a final offer in writing.
  • Ask the company name and the registered number: Check that the company has been established on companies’ house with a valid name & registered number.
  • Check the company: Has been established for at least 5 years under same name so to ensure not dissolving or changing names.
  • Check the key financials: Of the company to make sure their net value is over £1 million.

6) Questions to Ask a Quick Buying Company


  1. Who will be conducting the property valuation and how?
  2. Is the quick sale company purchasing your property themselves, or are they buying it on behalf of someone else?
  3. How long is the house sale expected to take? What stages are involved, and when does each step happen?
  4. Is there anything that might throw the timescale off-kilter?
  5. If your chosen quick sale company is buying the property, how do they intend to pay for it? Ask for proof of funds. If the buyer is genuine, they will provide you with proof of funds no questions asked.
  6. Is a third party buying your property? A genuine quick sale company should buy direct with their own funds so this situation should never arise.
  7. Are there any additional fees such as surveyor’s fees and legal fees?
  8. Are there fees if you pull out of the sale?
  9. Are there any factors which might cause the offer price to change? Is the offer ‘subject to survey and contract’?

7) Other Key Differences in the Cash Selling Process


  • A genuine cash buyer can release the funds to you within 7-10.
  • Realistic offers will usually be around 75%-80% of your property’s market value. Companies that offer you 90% are brokers and not cash buyers and those that start at 85% do this to get their foot through the door and then start chipping the price down the line on more than one occasion and especially 2 days before completion – the last minute chipping for no reason!
  • If you try to sell through other methods first, this might impact your property’s value.

8) A Final Word: How the Stats Make House Buying Companies Competitive Alternatives


Currently traditional house sales are falling below the asking price (as the stats below show). With cash buyers, you get an offer quickly and don’t have to wait to see what offer comes in. Only you can decide if accepting a lower cash offer, is better than waiting and potentially getting less than your asking price on the open market.
  • Some 81% of homes sold in May 2019 failed to make their asking price. We look at what this means if you're buying and selling at the moment. (Source: HOA)
  • On average, the gap between asking price and sale price across UK cities is up from 3.3 per cent in 2018 to 3.9 per cent.
  • The time frames can be much longer and traditional sales can depend on the time of year as this article shows.

The key takeaway is to go with the option that best suits your personal needs and circumstances and for many a quick house sale is great option.
 

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