House buying companies: what you need to know | Vivo Property Buyers
Posted by Vivo_Team on April 30th, 2020

What is a house buying company?

With the rapid expansion of the internet and online technology, the way we learn, communicate and shop has been revolutionised. This paradigm shift has allowed companies to adopt new, dynamic business models that allow them to function purely online, without the need for a physical location. This change has had a major effect on the property industry, where we can now search for potential homes via a website or property app, all from the comfort of our own living room. As well as giving homeowners more choice and freedom in terms of choosing their next move, it also means that house sales no longer have to start at an estate agents’ office!

This has led to a new way of selling your house fast, via a house buying company. They are able to purchase your property directly without the need for you to use an estate agent to find you a buyer on the open market. One benefit to this is that it saves you time, and you don’t get caught up into a complex property chain that slows down your sale.

How do house buying companies work?

Firstly, it is advancements in technology that has supported the rise in companies that can buy your house. They are able to exist purely online and using a combination of historical and recent property data, they can efficiently and effectively provide a seller with a quick offer for their home, normally within 24 hours and can even complete a purchase within 7 days. This has resulted in a more streamlined house selling process and for many, a less stressful experience.

This new method of selling is possible because most house buying companies are proceedable buyers, meaning they are not stuck in a property chain and as independent organisations, they already have the necessary funds in place for an immediate sale. As professional property buyers, companies like Vivo do not need to sell to buy (to raise funds), so there is never an onward chain.

Therefore, this addition to the property-selling market gives homeowners more choice in how they can go about selling their home. As well as going down the traditional route (which still may be the best option for them) and wait for a buyer, they can also go out and seek their own buyer by contacting a house buying company online. This is particularly useful for those in urgent need of a quick house sale. Whether they’re under the threat of repossession, their property chain is broken or their house sale has fallen through, companies like Vivo can help. There is no perfect, one-size fits all way to sell your home, but the increase in options is definitely a good thing

How much do house buying companies pay?

You may be faced with different ways to sell your home, all of which have their benefits and potential drawbacks. Our table below highlights several key differences between traditional estate agents, their online counterparts and house buying companies like Vivo Property Buyers:

Aspect
Traditional Estate Agents

Online Estate Agents

House Buyers
Fees Estate agents charge around a 2% commission fee (+VAT) and you will need to pay for legal fees too. Fees are fixed and you usually pay upfront, ranging from £500 to £1,000 Homeowners don’t have to pay any fees, which are handled by the property buying company.
Viewings They will arrange and conduct several house viewings, showing prospective house buyers around your home. Most viewings are conducted by the homeowner (you). Some online agents offer this service for an additional fee. Most will buy your house sold-as-seen, streamlining the house viewing process.
Contact Estate agents from both sides will handle correspondence, and it is unlikely you’ll communicate directly with your buyer. Owners will have direct communication with buyers (especially with viewings) while agents deal the negotiation stage. As they are buying your house, you can have direct dialogue with your buyer!
Timelines There is no set timeframe, it depends on location, competition and buyers in your chain, but an estimate is between 5-6 months (including legal matters). Your home may gain more visibility by being online, but the timelines are similar to the traditional method. House buying companies tend to provide an offer in 24 hours and can complete the sale in 7 days.
Guarantee House sales can fall through at any moment on the open market. Issues with the property chain can mean that buyers are no longer able to buy – there really are no guarantees. Using an online estate agent, the risks associated with traditional estate agents still apply. Using an online estate agent, the risks associated with traditional estate agents still apply.

What are the benefits of using a house buying company?

What should I do next?

Before deciding to go via the house buying company route, we recommend that you do some homework on who you plan to sell to. Not every company is the same, so it's beneficial to consider these things to ensure you're dealing with a reputable company and be confident you're in safe hands.
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Check their accreditation

One of the most disappointing and frustrating aspects of the rise of house buying companies was the malpractice of some firms at the start of this new industry who were not truthful and transparent about their services.

As a result, organisations such as The Property Ombudsman (TPO) were established, setting up rules and regulations for property buying companies to ensure fair practice and quality service is provided. Also, companies such as the National Association of Property Buyers (NAPB) were established to ensure you’re in safe hands with your house sale by using their members. Always review the companies you plan to contact first. See if they’re part of the NAPB or TPO and browse online reviews of the company for previous customers’ experience. We always recommend trusting third party review platforms like Trustpilot as they are more likely to be authentic.

When we founded Vivo, we wanted to create a company that is helpful, honest and transparent with its customers, a company that we’d want to work with ourselves. It’s important that we’re fair to our customers and that we’re trustworthy (just check out our Trustpilot score) and our ethics are something that we hold dear. As well as being part of the aforementioned NAPB and TPO, we’re also members of the Information Commissioner’s Office (ICO) and as a family-run business, we’re registered with the Federation of Small Businesses (FSB).

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Are they buying your house or helping to sell it?

House buying companies that are worth their salt, buy your house outright. However, some companies claim to be able to buy your home but it’s not as straight forward as that. There are three ways they can be involved:

  • Genuine house buying companies – these will personally buy your home, using funds they already have available. This is the option we most recommend.
  • Act as a house selling broker – they will help find you a buyer for your home, rather than purchase the house themselves. They then earn a commission from the deal.
  • Lead generation firm – they will pass on details to other property buyers rather than buy outright.

As you can see not all property buying companies are the same. There are those such as Vivo who are pure house buyers, using our cash while some may advertise as cash buyers but once a price is agreed they then allocate the property to one of their investors to complete the purchase – this may slow down the process if you require an urgent quick sale. Overall, understanding their intentions will help you make the best decision for yourself. Additionally, some house buying companies don’t visit the properties they buy, rather they just send round an external surveyor and a local agent to inspect the property. With all of our clients, Vivo visits the property once so we can meet the owner and ensure the vendor knows who they are dealing with.

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Is your house sale secure?

In the UK an offer being accepted is not legally binding. Your sale isn’t guaranteed until you’ve exchanged (or if the buyer fails to complete, then you get to keep the 10% deposit paid upon exchange). House sales can fall through at any moment during the sale process on the open market. Once a buyer has been found, the legal work takes around 3 months and only then, the exchange takes place.

While sales via a house buying company can be quicker, you should make sure you’re dealing with one you trust. A tactic used by unregulated companies is to offer up to 100% market value to entice you to choose their services. However, this is an empty phrase and rarely will you receive that figure. Typically the industry buys at 80-85% market value in exchange for a quick sale. Therefore, be wary of initial offers that appear ‘too good to be true’. Sometimes an organisation can lock you in with an initial offer, then gradually reduce the price as things ‘pop up’ in the survey, or wait until moving day where they reduce it even more and prey on your desire to move.

Additionally, if you are asked to pay anything upfront or to sign in a ‘lock-in’ contract where you can only sell to that company, politely decline and avoid them. Always make sure you get your formal offer in writing and don’t feel pressured to accept. The great initial offer is very enticing but the final offer is the most important one.

In terms of fees, as part of the services companies like Vivo pay all the fees associated to the sale. Therefore, ensure before you start the process that this is the case and there are no hidden fees related to the survey or even a ‘cancellation fee’ if you change your mind. As part of our ethics, once you have accepted our formal offer, your house sale and price is secure with no final changes.

Knowing these key details can help you make the right decision for you.

Is selling your house online the future?

We certainly believe so; as well as house buying companies that are purely digital, estate agents are increasingly moving their operations online as homeowners are changing their search habits. Maybe looking through the window of an estate agents’ office will be an alien concept to our children’s generation!

If you’re looking for your own house buying company, why not get in touch with Vivo to see if we can help you in your situation, or check out our latest reviews!

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Vivo Property Buyers is the trading name for Potrell London Ltd, The Ashridge Business Centre 121 High Street, Berkhamsted, Hertfordshire, HP4 2DJ.

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