Many homeowners automatically opt for the “traditional” house selling route — hire an estate agent, advertise on the open market, hold viewings, wait for an offer and (hopefully) sell. This can be a long and frustrating process.
Even before coronavirus and the recession hit, the average time to sell a property in the UK was over four months, with many people waiting much longer to find the right buyer. Currently, house sales are taking longer than normal to complete due to the backlog caused by the property market freeze during the first lockdown in March and the rise in demand as people flock to beat the stamp duty holiday deadline.
Selling directly to a property developer or housebuilder makes the whole process much quicker, and that’s just one of many reasons for selling your house to a developer.
Common Problems When Selling a House to a developer
What’s wrong with opting for an “on market” house sale via an estate agent? Absolutely nothing. However, there may be a better option for your circumstances, preferences and time schedule.
Think about what your priorities are — a quick house sale, a high sale price, a low-stress process — and consider all the options available. Some common problems selling with estate agents include:
- Expense — many estate agents charge a percentage of the final sale price as their commission, and this can be a significant amount. Fees typically range from 1% to 3.5%, which would mean an agency bill of £8,820 for a house that sells for the UK average price of £252,000.
- Poor Service — if your estate agent doesn’t keep you updated or isn’t proactive about selling your property, it can take longer to find a buyer and could result in missed opportunities.
- Inflexible — if you decide to withdraw your property from the market, you may still be liable to cover the estate agent’s costs.
- Slow — before the pandemic, the average time to sell a house was 4.5 months. Currently, properties are taking even longer to sell due to a backlog of transactions caused by the first lockdown and a rise in demand following the introduction of the stamp duty holiday.
Why Should I Sell My House to a Developer?
1) A Chain-Free House Sale
Almost half of all traditional house sales fall through before completion. If you’re part of a chain — where the sale of each house is dependent on the preceding and subsequent purchase completing successfully — the risk of a failed sale is much higher than it would be in a chain-free sale.
A developer does not need to sell a property to purchase yours, making it a chain-free sale with a much lower risk of falling through. Broken property chains can cost homeowners considerable time and money, so this is the number one reason why we advise people to sell to a developer.
2) House Sale Completion at a Pace That Suits You
Partly related to reason one, a developer can be much more flexible and accommodating than a regular buyer when it comes to setting a completion date. This might mean selling as quickly as possible or agreeing on a timescale that fits in with your other commitments and plans.
3) Less Uncertainty and Risk
Selling to an unknown buyer with whom you communicate via an intermediary — estate agents, solicitors and conveyancers, for example — can lead to miscommunication and misunderstandings. Furthermore, there’s no certainty that the sale will reach completion as a buyer is legally entitled to withdraw from the sale up to the point of exchange (typically about a week before completion).
Selling to a reputable property developer removes this uncertainty. You know exactly who the buyer is and will deal with them directly. A developer will not withdraw from the sale for personal reasons or because they’ve fallen in love with another home. Furthermore, if you’re selling to a developer under a part-exchange scheme, they will be keen for the sale to go ahead so that you are in a position to buy one of their new homes.
4) House Part-Exchange
If you’re buying a new-build property, the developer may offer a part-exchange (PX) service. This will allow you to sell your home directly to the developer in exchange for a reduction in the price of your new home.
You may have to accept a slightly below market rate for your home — typically 90-92% — but PX speeds up the sale process and removes a lot of the hassle because you are selling to and buying from the same entity. This is a great option for those trading up or moving into a retirement property.
5) Equity Release to Fund Your New Home
Some developers will purchase part of your home in exchange for a reduction in the price of your new property. If you have a large garden, outbuildings or an annexe, this might make selling to a developer an attractive option.
With the equity released from your current property, you can buy the new house without moving, giving you the freedom to move in your own time or make decisions about how to use both properties.
6) Sell Your Home Fast in a Slow Market
During periods of economic uncertainty, such as a recession, people typically become wary of buying or selling. This slows the market down and often increases the time it takes to find a buyer.
It may be much quicker and easier to sell to a developer, who will not have the same barriers to buying as an individual — they probably won’t need to secure a mortgage, for example. Additionally, as people’s disposable incomes shrink, smaller, lower-priced properties become more attractive. If you have a large home, a developer may want to buy it and convert it into several smaller units that they know will sell quickly.
7) Reduce the Cost of Selling a House
Estate agents fees are one of the biggest costs involved in selling a house. They vary considerably but typically range from 1% to 3.5%. On a house valued at £251,500 (the national average as of December 2020) that could mean shelling out almost £9,000.
Selling to a property developer allows you to avoid paying this fee.
8) Avoid the Inconvenience of Property Viewings
Many sellers feel uncomfortable at the thought of countless strangers traipsing through their homes and picking holes in everything, from the layout to the decor. If you’re selling due to a separation, ill-health, job loss, death in the family or any other traumatic event, opening up your home for viewing can be an emotionally draining experience. Perhaps you just don’t want the hassle and inconvenience?
Selling to a developer negates the need for viewings, making the sale process less stressful and time-consuming.
9) Avoid the Time and Cost of Home Improvements
A property developer will most likely make significant changes to your home after they have bought it — meaning they will probably be less interested in things like the cosmetic appearance of the rooms, a scruffy garden or peeling paint than an individual buyer would be.
You can, therefore, skip the “repair and improve” stage of selling a house, which can absorb considerable time, money and energy.
10) Achieve a Higher House Sale Price
This is not a given, but it is a possibility. If you have a large home or the developer is buying your property and adjoining ones, they may be expecting to make a sizable profit by selling on multiple properties. This will allow them to be more generous with their offer than a traditional buyer would (or could) be.
Don’t expect this as standard, but it could certainly be a surprise bonus!
If you’re a developer and would like to know how we can help you sell more properties, contact us today for a free consultation. We work with housebuilders and developers throughout the UK and specialise in funding part-exchange for housing transitions.
Updated March 2021