6) "Online Property Buying Companies" can buy houses very quickly and for cash. But can they buy your entire property portfolio? Learn more here - - - - -
Companies that buy houses
C ompanies That Buy Houses Have Increased In Numbers Over The Last Few Years – Largely Due To The Rise Of Online Search Engines Such As Google And The Internet At Large. These “We Buy Any House” type companies can buy houses very quickly and for cash. So you may be wondering whether these companies are also capable of buying your entire property portfolio from you?
We'll examine this question in depth in the detailed report below - where you'll also learn:
5 minute read
Can companies that buy houses buy entire property portfolios?
Well the simple answer to the question "can companies that buy houses buy my entire property portfolio from me" is YES - so this is a selling route you can consider.
HOWEVER THE BIG TRADE OFF for selling a portfolio (or even just a single property) via one of these "sell house fast" companies is that they won't be paying anywhere near the full market value of your portfolio. In fact they'll only be paying around 75% of what your portfolio is worth.
- So let's say an individual house in your portfolio is worth £200K.
- And let's say the house buying company will only be paying you 75% of this price.
- That's a purchase price of £150K for a property that's actually worth £200K.
Sell house fast
I'm sure you can do the maths yourself here? But just to reinforce the point - the potential profit for one of these fast house sale companies is a whopping £50K - per property.
However they'll almost certainly be paying for your selling costs - such as estate agent fees, solicitors fees etc. So in reality they won't end up with the full £50K as profit. But pretty close to it.
We're not saying this is a bad thing - because all of their fees, profits and costs should be evident up-front (though please check). And you always have a choice of who you sell your houses to. So these companies are just another option for you to consider - or dismiss.
Their USP is speed of sale and for this speed of sale you'll be receiving 75% of your actual property value.
That's the deal here.
Situations for a fast house sale
There are quite a few situations where it's desirable - or even downright necessary - to sell property(ies) quickly - for example:
- When money from a property sale is needed to pay off urgent debts.
- Where money is needed to inject into a business.
- When a property or portfolio has been inherited (along with all the hard work involved) and it's costing money to keep - with mortgage payments, utility bills, council tax etc.
- Where an owner becomes ill - and the burden of owning a portfolio becomes too great.
- And many more reasons...
So if you're someone who needs to sell quickly? And you're not too concerned about the price? Then you might want to consider this selling route.
Is a quick house sale company right for you?
That's a question only you can answer. And your answer will be based on your need to sell versus the amount of money you need to achieve.
Normally when someone who isn't under any time-pressure is asked the question: "how much do you want from the sale of your property" their answer is: "I'd like full price please".
However as previously mentioned - under certain circumstances where getting SOME MONEY QUICKLY is more important than getting FULL MONEY SLOWLY it may be that a quick house sale company is the right choice.
But only you can make that judgement.
Can your buyer complete on the purchase?
You need to ensure that the company you choose to buy your portfolio has the capability to complete on the purchase. Because not all companies that buy houses have the means to do so.
- Do they really have the funds to purchase?
- And can they actually transfer these funds to you when they say they will?
Also - will they pay you the price they promise to pay you at the beginning? Or will they try to reduce the price still further at the end of the sale - when you're more committed and desperate?
Buying a portfolio of multiple properties is very complicated and there are a lot of things that the house buying company needs to get right.
Or they won't be able to complete - and you won't end up getting paid.
Getting started - valuing your portfolio
Before approaching any quick house sale companies you need to be aware (as already mentioned) that they are unlikely to pay you full market value for your properties. In fact they’re likely to offer you around 75% of the full market value.
And before you even start talking to these companies - you need to know categorically what the full market value is of every one of your properties. Because this will enable you to make an informed decision on whether their offer is a fair one - or crazily low.
In other words you need to know what the the full market value is as a starting point for your discussions.
Getting started with valuing your portfolio
Getting property valuations isn't an exact science - and there isn't a definitive amount that a property is actually worth. Ask 3 people to value a property and you'll get 3 different answers. However the 3 prices should be pretty close to each other.
In the previous example of the £200K property you might say: "this property is worth between £195K and £205K - £200K being the price in the middle.
3 local estate agents
Get in touch with 3 local estate agents and ask them to value your property(ies). Bear in mind that estate agents typically overvalue properties - to encourage you to choose them.
Ask them to give you a realistic valuation in order to sell in 8 - 12 weeks. Then take the average of these 3 estate agent valuations as your base price.
Eg my portfolio at full market value is worth £2.8 Million
Sold house prices research on Rightmove & Zoopla
Now you need to also do your own House Price Research to determine the value of your portfolio yourself - to compare with the values you got from the 3 estate agents. You can do this from the comfort of your home by looking at property sales sites such as Rightmove and Zoopla. I personally use Rightmove Sold Prices for my research.
This is actually quite easy to do. And this is how most property investors obtain valuations for properties. More importantly this is also how estate agents obtain valuations.
- Start by looking for similar properties to yours that have sold in the last 1-2 years.
- See how much these properties sold for.
- Start off by looking at your postcode area only. And then go to 1/4 mile out. Then to 1/2 mile out. And you should see other properties and their sold prices.
- You need to compare apples with apples. So if your property is a 3 bed terraced house in average condition. Then compare to other 3 bed terraced houses in average condition.
It's as simple as that really. Although it does depend on the number of recent sales in your area as to how good your results will be.
How much do you owe on mortgage(s)
You now know how much each of your properties is worth which is great news. So you now need to consider how much you owe on the mortgages (if you have any) to determine the viability of selling at 75% of value.
Let's use the example from earlier of a house that's worth £200K that you're selling for £150K. How much do you owe on any mortgages?
- If the outstanding mortgage amount is less than £150K (let's say £140K) then that means you can sell. Because you will generate enough money from the sale (£150K) to repay the mortgage company back (£140K). Leaving £10K for yourself.
- But if the outstanding mortgage amount is more than £150K (let's say £160K) then the sale is impossible without you adding £10K of additional money to pay back the mortgage company their £160K.
Selling properties and title deeds
In order to sell any property that has a mortgage on it you must also be able to pay back the outstanding amount of the mortgage on the actual day of the sale.
Your house is security for the mortgage company - so a condition of sale (from you to the fast house sale company) is that you pay back the outstanding amount owed at the same time.
When you sell your house to your buyer there are title deeds that need to be transferred from you to the new owner (via solicitors). These title deeds CANNOT be transferred without you also clearing the outstanding mortgage amount.
Once the sale has completed these title deeds will then be updated to show the new buyer as the new owner. This is one of the jobs that solicitors take care of for you.
Quick house sale checklist
Here's a checklist of things you need to look out for when considering selling your portfolio to a quick house sale company:
- Before you call any "quick house sale" companies make sure you know the value of your properties yourself - 3 estate agents and desktop research on Rightmove.
- Contact at least 3 companies and see how they differ from each other.
- Check out the companies on Google and see if there are any positive or negative reviews from past clients. However don't believe all that you read as reviews can sometimes be misleading.
- Only sell to a quick sale company that is UK government approved such as Property Redress Scheme or The Property Ombudsman.
- Make sure everything you discuss on the phone is backed up with an email or a letter as written evidence.
- Take time to understand the details - as getting things wrong could be an expensive mistake.
- Quick house sale companies typically try to make the deal sound good by including all costs such as legal fees, selling fees etc. They compare the costs of selling the traditional way (using a high street estate agent) to selling via themselves. And they make it all sound wonderful. Just make sure it is what they say it is.
- Quick house sale companies will probably want you to use a solicitor that they recommend. This isn't necessarily a bad thing, but consider using your own solicitor. This may cost you a little more money, but could save you any costly mistakes.
- Don't commit yourself to any long tie-ins. These shouldn't be necessary if this is truly a quick property sale company.
- Be 100% honest with all answers you give to questions about your properties. Or you risk them lowering their offer price. Or even pulling out all together.
Pros and cons of a quick property sale
- You can get your properties sold quickly.
- No need to conduct endless viewings and answer questions from prospective buyers.
- There's no selling chains to break down and stall your sale.
- No need to spook your tenants with "for sale" signs.
- Leave it all to someone else.
- Sell your house for a fraction of the price it's actually worth.
- The initial price you're given will be an "in principal" offer and this price may be reduced later after surveys and valuations.
- Despite promising to buy your house your buyer could still pull out after survey and valuation if these come back worse than expected.
- There will be good and bad quick house buying companies. The bad ones could be unscrupulous and lower your agreed sale price days or even hours before you're due to complete. Leaving you at their mercy.
- The actual process of buying your properties isn't too dissimilar to a "regular house sale" so the length of time to sell could end up being a lot longer than initially promised.
- You really need to consider your Capital Gains Tax position on any profits you might make from the sale. And it would actually be better to sell your portfolio over a number of years to utilise annual tax free allowances - rather than selling all properties in one go. Take advice here from your accountant / independent financial adviser.
TIP - A specialist property portfolio buying company such as ourselves can structure your sale to include multiple years of Capital Gains Tax allowances - meaning you'll pay a lot less tax.
Conclusion - Companies that buy houses
Do some investigation work on these companies that buy houses when you decide to sell your property portfolio. These companies should be able to handle the entire process for you. However do your homework and don’t just go ahead with the first company you talk to.
The fees from these companies will be enormous – but if speed of sale is more important then selling price – then maybe this is a selling route that can still work for you.
Another alternative you might consider is selling to a specialist property portfolio buying company - such as ourselves. We're a company that takes a partnership approach to selling - and we can structure sales over a number of years (if needed) to ensure you keep as much of the profits as possible.
Be sure to contact us for further information.
Phil Calladine - portfolio consultant