Selling through a quick sale company? What you need to know.
A quick sale company will buy your home quickly, albeit for a discounted price. Is it worth considering, or should you steer clear?
How do quick sale companies work?
Quick sale companies offer homeowners an alternative way to sell a property. They offer a rapid valuation and can usually complete a purchase much more quickly than selling through the open market (typically 6 months from going on the market to completion).
In exchange for this faster service and guaranteed sale, quick sale companies will expect to acquire your property for a discounted rate.
Once they have acquired your home, the company will then either sell it to another buyer or retain it as part of an investment portfolio.
Selling to a quick sale company may be the answer if you:
- are desperate to sell because your buyer has pulled out
- need to avoid a repossession
- are in financial difficulty
- need to relocate quickly
- need to sell an inherited property to pay Inheritance Tax (IHT)
- have been unable to find a buyer on the open market
You will still need a conveyancing solicitor to carry out the legal work, but as there will be no chain the conveyancing process should be completed in less time.
Here's what you need to know when selling through a quick sale company:
1. Get your property valued
You will first need to know what your property would fetch if selling through an agent on the open market.
Obtaining a few property valuations from estate agents is a good start. You could even obtain a formal independent valuation from a surveyor. Until you know what your home is worth you have no context with which to consider the quick sale company's offer.
2. Does the offer seem unrealistic?
If a quick sale company claims to be able to buy your home in record time for anything close to 100% of its market price, be sceptical.
You can expect a quick sale company to offer you a price discounted by around 25% of the amount you could get by selling through the conventional estate agent route.
Some unscrupulous companies have been known to offer a high price, only to then substantially reduce the offer just before completion.
3. Does the contract restrict your options?
Some quick sale agreements contain a clause that prohibits you from accepting a better offer from another buyer. Once you have signed the agreement, you may still be weeks or months away from completion as the conveyancing process must still be completed.
If having already signed the agreement, you subsequently receive a higher offer from another buyer, you will be prohibited from accepting this offer or from renegotiating with the quick sale company.
If the quick sale company then reduced their offer you may have no option to accept it.
If you then decide to pull out of the agreement, you may find that you are tied in for an extended period.
You should ask your solicitor to look at the quick sale agreement before you sign it.
4. Does the company adhere to a code of practice?
This quick sale sector is not regulated, and there are companies that seek to take advantage of the lack of regulation.
Some companies may actually be registered with the Royal Institute of Chartered Surveyors (RICS) or they may claim to adhere to a voluntary code of practice. In 2013, the National Association of Property Buyers was formed as a voluntary code of practice for the house buying sector.
The company may also have registered with The Property Ombudsman).
Make sure you check the company's credentials with the relevant body.
5. Shop around
Quick sale companies vary considerably in the way they do business. You may also find a significant disparity between offers from different companies.
Obtain offers from 3 or 4 companies and compare these offers in the broader context of the service being offered.
You can certainly negotiate with the company who may be prepared to increase their offer.
6. Consider your other options
Your options will depend on how desperate you are to achieve a quick sale.
An estate agent could possibly secure you a buyer much faster with a sale price strategy that undercuts similar properties but still higher than a quick sale company’s offer.
Alternatively, you might consider selling through a property auction.
If you are also buying a property and are afraid the seller might try and find another buyer who can complete sooner, talk to the seller. Communication can reveal unexpected options.
What if I am having difficulties paying my mortgage?
If you are struggling to pay your mortgage, speak to your mortgage lender before you assume you need to sell up fast. During the Coronavirus pandemic, lenders have been more understanding but the government has not offered any support for mortgage holders.
The lender may agree to extend the terms of your mortgage, for example, which would reduce your regular repayments. The lender may even consider a repayment holiday of any number of months.
7. Don’t make a hasty decision
When you’re under pressure to make a quick sale, the temptation is to prioritise speed over everything else, which can lead to too-hasty decision making.
Selling your home is a major undertaking, so don’t rush into anything; take your time, look closely at all the options and get everything in writing.
Above all, read everything carefully and ask your solicitor to explain anything you’re not clear about in the agreement before you sign it.
Your next step
If you are buying, selling, remortgaging or transferring equity in a home, we can help you find an expert conveyancing solicitor.
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- How do I speed up the conveyancing process?
- What documents do I need when selling my home?
- What must a seller disclose when selling a property?
- How to (properly) compare conveyancing quotes
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