| How do you go about getting your hands on a fair cash offer? |
In some ways meeting with a cash property buyer is not unlike a job interview. Both sides can forget each is selling something.
You probably start out with a figure in mind. That's only natural. The cash property buyer will do likewise by determining the market value of your property as a starting point.
But the way you calculate the value of your house may bear little relationship to what the cash property buyer considers a fair cash offer for your house.
Why the different perspectives? Cash has a price..
"A cash for your house" service operates in a market like any other service..
As the seller bear in mind that cash property buyers / professional homebuying companies provide a service. And that service has to be paid for. Cash property buyers run their businesses on the expectation that there is a fair margin to be made. Otherwise they wouldn't be able to provide the service. Full stop.
Don't get me wrong. A cash buyer will know the open market value of your property - that's the price you could get for your property through an estate agent if you are able to wait that long... That's always their starting point when calculating cash offers. But a fair cash offer for your house is unlikely to be the "open market value" or "full value" unless your property has hidden potential.
And what about the cash property buyer? Well some won't even talk to you if you're not prepared to accept an offer 20% below market value. End of story.
For others (and I'd include us here) the picture is more complex. While we run our businesses on the basis of a certain margin, how an offer is "packed" can be more complex.† To us, and many others, it's not as simple as just asking the question "would you accept an offer 20% below market value".
If only things were always simple..
Why? Some house sales are of what I would call the "plain vanilla" kind. These include people stuck in property chains or relocating. Others are far more complex because of the financial situation of the vendor (for example). These need more creative thinking - where simply making a† 15-20% below market value cash offer doesn't work. This is not because the seller won't except the offer. It's more that their circumstances dictate they can't.
The more sensible approach here is to work through whether there is a win-win outcome.
Take an example of a property with a second charge which leaves the seller little flexibility in terms of how they price their house. If the charge can be converted to an unsecured loan (a personal loan) then the seller can move which is what they really want. Sure the loan doesn't disappear, but if the seller is struggling with mortgage payments this could help them achieve their aim.
The bottom line is:
Do you need the service....or is it just convenient to sell quickly?
A service that you need is worth paying for if it helps achieve your aims. It's easy to forget that a trader or investor will be very motivated to buy your house. Of course they will, that's why they're in business. A sensible cash offer for your house is always closer than you think...if you know what you really want. Or need.
What's more selling your house quickly to a cash property buyer does not have to mean you'll be much of out of pocket.† Nor does it have to mean you need to move out quickly or even in the longer term. The underlying rationale is that you sacrifice equity to sell, rather than hard cash. For some people, under some circumstances, it's an attractive proposition. Even painless.
Back to the fair cash offer..
Our view is that any property trader worth their salt will be just as interested in your circumstances as your property, probably more so. This is because they'll hard to find a solution to your present circumstances.† Both parties have an incentive to arrive at a fair cash offer.
There is rampant competition in the property market. If there are "rogue" property companies out there,† getting away with making 50% below market value cash offers to people,† they only exist because some vendors continue to be uninformed. Which in a way, brings me back to why we built this site in the first place...
Getting what you want..
If you meet two companies rather than just one it does give you a stronger negotiating position and also a Ďfall backí position if you find you donít like one of the companies or find they canít meet your needs. Adding a bit of competition between cash buyers works in your favour. But if you have meetings with too many companies, you risk coming across as a timewaster, and so actually increase the risk that you wonít be taken seriously as a seller. The cash buyers you've contacted wonít put much effort into working out a solution for you.
..play the field..but..
What sellers fail to realise it that the property world is a small one. It's up to you whether you're honesty extends to letting the companies you contact know who else you have been in touch with (if asked).†
If you get caught out (it wouldn't be the first time we have bumped into someone else we know on a deal..)† then buyers will question your integrity and your cash offer may well slip from your grasp. All the rules of house sale negotiations hold true here. Remember though property cash buyers get a lot of practice. If you are open and genuine about what you really want you're far more likely to get a fair cash offer.