How much do cash house buyers actually pay?

To understand the cash house buying market, and to avoid being taken for a ride, you need to look very carefully at the question above.

You’ll notice I don’t ask ‘how much will a cash house buyer offer’ but ‘how much do cash buyers actually pay’. You might think that this is the same thing, but sadly, all too often, the amount of money a cash buyer will offer for your home, and the actual payment that reaches your bank account when the sale completes, are two entirely different figures.

So how much can cash house buyers pay for your home? What is a reasonable offer? And why should you be wary of offers that seem too good to be true?

In this article, the Guru will guide you through the cash house buying process and explain how it works – or at least how it should work if you have your wits about you. When you see the costs involved in buying a home for cash, you’ll understand why those high offers are actually just pie in the sky offers.

Cash house buying companies are not charities

It’s important to understand from the start that a cash house buying company is just that – a company. They’re not a charity, here to help you out of the kindness of their heart, they are in business to make money, just like any other company. That doesn’t mean that you can’t find cash house buyers who offer great service, or even companies that care about their customers and finding the right solutions for them. But they are not here to do you a favour and they won’t give you any more than they absolutely have to for your home.

They need to cover their costs and make some profit, or there’s no point in being in business in the first place. Once you see the costs involved in buying a house for cash, you’ll soon see who’s being realistic and who’s making silly, unsustainable offers just to get your business, with no intention of ever paying that much for your property.

How much can cash house buyers actually pay?

To understand what is a reasonable cash offer for your home, you need to ask how do cash house buying companies work?

At the end of the day, cash house buying is like any other retail transaction – companies look to buy stock low and sell it high to make a profit. A house buying company purchases your property at a discount, then immediately puts it on the open market at full market value, or perhaps a little higher, with a view to selling it at as close to this price as possible.

You might think that the difference between what they paid you for the property, and what they sell it on for, is their profit – and if you do, then you probably think that around 20% is a greedy profit margin to be making at your expense. However, just like a shop has staff, rent and other costs to take off their profits, a cash house buyer also has significant costs that need to be taken into account. That’s why any offer above 80% is unlikely to be genuine, because the costs involved simply don’t make offers like that that possible.

What does a house purchase cost for a cash house buyer?

If you’ve ever bought or sold a house, then you’ll know that it’s an extremely expensive business. And doing this as a limited company costs even more, with extra taxes on top of the normal expenses. The costs for a cash house buyer can add up to over 10% of the property value, and include:

Stamp duty on purchase
Additional stamp duty for limited companies +3%
Three sets of solicitor fees at around 2%
Acquisition and holding costs of around 4.2%
Estate agent fees of around 2%

That 20% difference in price doesn’t feel so greedy now, does it?

Let’s take a closer look at each of these costs…

Stamp duty
Companies that buy property are required to pay additional stamp duty on each of their purchases over £40,000. The rate is 3% above the standard stamp duty rate for each price bracket, so if the standard rate is 0% then they pay 3%, if the standard rate is 5% then they pay 8%.
Solicitor fees
House buying companies need to pay solicitors’ fees on when they buy your property and again when they come to sell it. In addition most reputable companies will also pay your legal fees for the sale, so they actually have to cough up for three sets of legal fees on every transaction. These fees range anywhere between £500 – £1500 for each stage, coming to over £2500 in total.
Acquisition costs
The house buying company also has to pay the cost of their banking facilities to provide the funds they need. On top of this, they have to pay for a RICs survey, at around £450 to £600 depending on the property value, and they have to pay this before they’ve even bought your property.
Holding costs
These are all the expenses involved in owning the property until it sells. This includes bills, such as council tax and insurance, as well as energy costs to prevent damp, maintenance costs to keep the property in good condition and security costs if it is vacant. You need to bear in mind that, by the very nature of the business, cash buyer properties are unlikely to sell fast. If they did, then there would be no need to use a cash buyer in the first place. That means that the buyer often has to carry the costs of owning the property for at least six months, and often much longer while issues are resolved.
Estate Agent Fees
Cash home buyers have to use estate agents to resell their properties, and this costs them the same as it costs you – around 2-3% plus VAT.

When you see all the costs for cash house buying companies laid out like this, it’s easy to see how they can quickly add up and chip away at what you thought was a ‘greedy’ profit margin. Don’t forget, you also have to factor in the costs of running their business, such as staff, marketing and premises, insurance, equipment and phones. Even with a 20% mark up, there is surprisingly little left in the pot as profit.

When you do the maths, it’s obvious that any offer of over 80% simply isn’t realistic and is highly unlikely to be honoured. Either the buyer is a ‘busy fool’, who is making a miniscule profit on every property that they handle, or they think that you’re the fool who won’t question their unrealistic offer. Which do you think is more likely?

How can you get a higher offer from a Cash House Buyer?

Of course, it’s in the house buying company’s best interest to offer as much as they can for your home. It’s a very competitive market and they need to attract sellers. After all, if they don’t buy houses, they don’t make any money.

But with costs as high as I’ve described above, there’s little wriggle room within their already tight profit margins. However, there are occasions where they can cut those costs, and the more reputable companies will pass the savings on to you in the form of a better offer.

Then, and only then, can an offer over 80% be realistic.

Get A No Obligation Cash Offer From A Guru Approved Cash Buyer

The guru has painstakingly reviewed and analysed the house buying companies in the UK, assessing them against his strict best practice criteria.

In short the hard work has been done for you, if you want a no obligations cash offer from a genuine cash house buying company with best in class service use the guru recommended service below to be matched with the right buyer for you, your house sale could be just a few clicks away.

Not sure if a cash offer will work for you? Find out what you could get in under a minute without having to enter any contact details.

Cash House Buyer

Criteria

Next Steps

Are they a genuine house buying company?

Is their offer realistic?

No contract or tie in to sign?

Can you use your own solicitor?

No fees to pay?

Are they registered with a redress scheme?

FIND A BUYER

Click the button to get an idea of what an offer from a cash buyer would look like in just a few clicks.

If the offer could work for you we will match you to a Guru approved buyer.

Checked

All of the companies have passed our rigorous 16 point checklist.

Verified

We have mystery shopped all of the companies and got feedback from past customers.

Guaranteed

All of the companies have signed up to the guru best practice guidelines for house buyers.

How can I get a genuine offer over 80%?

There are certain rules called ‘stamp duty exemptions’ for companies buying property. If the property that you’re selling falls under one of these exemptions, then they can afford to offer you a little more as their costs will be less. These exemptions include:

You are selling a probate property
If you acquired the property you’re selling as a beneficiary of a will, or you’ve been deemed the legal owner through probate.
You are buying a new build
If you’re in the process of buying a new build property to move to after you sell your current property.
You are relocating for work purposes and buying another property
If you’re relocating due to getting a new job or being relocated for your current role. (In this case you don’t need to be buying a new build to qualify).
You are selling to a company to repair a broken chain
If your house sale has fallen through and you risk losing your ongoing purchase, then the home buying company qualifies for the stamp duty exemption.

Under all of these circumstances, the cash house buyer purchasing your property doesn’t have to pay stamp duty. This cuts their costs and so they can afford to offer you more, usually as high as 85% of the property’s value.

It’s worth being aware of these exemptions, so that you know if you’re getting a fair price from your cash house buyer. Some unscrupulous firms will simply pocket the extra profit and not pass it on, so always ask the question if you think your home qualifies for stamp duty exception.

Reasons your offer might be less than 80%

Now that you understand why around 80% is a fair offer for your home from a cash house buyer, you’d be forgiven for assuming that you’ll automatically get an offer like this. But unfortunately, there are times when your offer can come in a little lower.

In the same way that there are times where the company’s costs are lower, and they are able to offer you more, there are also times when those costs will be higher. Once again, they’re not a charity, so if it costs them more to buy your home, then naturally they will pay you less.

Lower offers are usually made because the company anticipates issues with the resale of the property, which could either affect the sale price or extend the length of time it takes to sell. These are usually issues affecting the ability of a potential buyer to get a mortgage. This can include a number of factors, such as:

The property is of non-standard construction
The property has subsidence issues
There are issues with a septic tank
The property has Japanese knotweed
The property doesn’t have long left on its lease
The property has high service charges

Understanding your offer

While it’s important to understand what percentage to expect as an offer from a cash house buyer, it’s equally important to understand what that percentage relates to.

Spoiler alert – it’s not going to be 80% of your asking price with an estate agent!

Let’s be honest, very few properties sell at their asking price these days. There’s almost always some negotiation, and this is built-in to the ‘on the market’ price. Everyone knows the game, and we all play along. The sellers aim high, the buyers pitch in low and the sale price is agreed somewhere in the middle.

To complicate matters, estate agents will often over-value properties to massage your ego and encourage you pick them to sell your home, even though they know you’ll never actually get that much for it.

So if your property is currently on the market for £100,000 and the house buyer has offered you £76,000 this doesn’t mean that your offer is 76%. What it actually means is that the cash house buyer has realistically valued your home at £95,000 and is offering you 80% of this. £95,000 is what your house would actually sell for on the open market, once the haggling of the negotiation dance is done.

To read the Guru’s words of wisdom on how cash house buyers assess the real value of your property, click here

Get A No Obligation Cash Offer From A Guru Approved Cash Buyer

The guru has painstakingly reviewed and analysed the house buying companies in the UK, assessing them against his strict best practice criteria.

Not sure if a cash offer will work for you? Find out what you could get in under a minute without having to enter any contact details.

Cash House Buyer

Criteria

Next Steps

Are they a genuine house buying company?

Is their offer realistic?

No contract or tie in to sign?

Can you use your own solicitor?

No fees to pay?

Are they registered with a redress scheme?

FIND A BUYER

Click the button to get an idea of what an offer from a cash buyer would look like in just a few clicks.

If the offer could work for you we will match you to a Guru approved buyer.

Checked

All of the companies have passed our rigorous 16 point checklist.

Verified

We have mystery shopped all of the companies and got feedback from past customers.

Guaranteed

All of the companies have signed up to the guru best practice guidelines for house buyers.

Be wary of offers that are ‘too good to be true’

“But Guru,” I hear you say. “This company are offering me 90%. Surely that is a better offer and I should go with them?”

I hear this kind of comment all the time, and it really frustrates me. There are hundreds of wannabe cash house buyers trying to win business in a relatively small market, and many of them will stop at nothing to hook you in. This includes offering you apparently generous prices for your home that they have absolutely no intention of paying.

As I’ve shown, these offers just don’t add up. They are simply not affordable. So you can be absolutely certain that you will never, ever, get that much money for your home.

Of course, they won’t tell you this straight away.

Often, they’ll wait until as late as the day your sale is due to complete before they drop the bombshell of their actual offer, these companies even have a special name for it, they call it “chip”.

You can read about this and other shady practices used by disreputable companies here.

This leaves you with Hobson’s choice of either accepting the new lower price or starting the whole sales process again with someone else. They know that most sellers simply don’t have the will to start again when all of their possessions are in boxes ready to move, and many sellers don’t even have that option, because of time or debt pressures.

If a company is offering you more than 85% – and plenty of them will – then the Guru says walk away. You can be sure that this is just bait for an unscrupulous trap. I know how tempting some offers can be, especially when you’ve got debt problems or an inheritance is at stake. But trust me, these figures are about as realistic as Barbie’s figure.

But don’t despair; not every cash house buyer is out to rip you off with fake offers. I’ve checked out all the leading cash house buying companies and despite all the problems with the industry, I have found some companies that pay what they say they will, with a fair price and great service. To find out who to trust, and who to avoid, visit my recommendations page by clicking the button below.

Cash House Buyer Guru

How much do cash house buyers actually pay?

Cash house buying companies are not charities

How much can cash house buyers actually pay?

What does a house purchase cost for a cash house buyer?

How can you get a higher offer from a Cash House Buyer?

Get A No Obligation Cash Offer From A Guru Approved Cash Buyer

Checked

Verified

Guaranteed

How can I get a genuine offer over 80%?

Reasons your offer might be less than 80%

Understanding your offer

Get A No Obligation Cash Offer From A Guru Approved Cash Buyer

Checked

Verified

Guaranteed

Be wary of offers that are ‘too good to be true’

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