Selling a House to a Builder

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Property developers, also simply referred to as builders in this guide, sometimes make offers to buy houses. They might have an interest in renovating an existing home with an eye to making a profit when reselling it, or they could offer you a part exchange. Although there are some pros to selling this way, you might be able to get a better profit and sell faster via other methods.

1. Why do some homeowners sell their properties to builders?
2. The potential benefits of selling your home to a builder
3. Disadvantages of choosing to sell a property to a builder
4. How to sell your flat or house to a builder
5. Alternative options to find a buyer for your house or flat
6. Top queries and answers about selling your property to a builder

Why do some homeowners sell their properties to builders?

If you own a house or flat, whether it’s freehold or leasehold, and you’re hoping to sell it, there are a few options available for finding a buyer that have their unique pluses and minuses.

One such method is selling your home to a property developer, also commonly just called a builder. These are individuals or companies that specialise in constructing houses or flats, renovating or building extensions on homes to increase their value so they can resell them at a profit at a later date, or they do both.

As explained in this guide, some owners opt to sell their properties to builders for a number of reasons. For example, it can be a quick way to get some certainty about a genuine offer on your property without any of the risks of a private buyer deciding to walk away from the sale.

And builders might be willing to purchase your property even when the housing market is suffering a downturn. Recent press reports suggest that increases in house prices – which have been soaring since before the pandemic – are starting to slow, yet builders are still pushing ahead with constructing homes due to ongoing demand for them.

Yet there are also some drawbacks to selling your house to a property developer that are also important to learn about before you make final decision on whether to choose this option. This guide not only provides an overview of those possible negative consequences, but it also outlines some alternative approaches to finding a buyer that you may want to consider.

The potential benefits of selling your home to a builder

Property developers offer a few benefits to homeowners looking to sell their flats or houses, whether they are freehold or leasehold, and some of those advantages might align with your main priorities when selling – such as wanting an uncomplicated and less risky sale. Below you’ll find a short summary of what some owners see as the perks of selling to a builder.

Less uncertainty: One of the most frustrating experiences when selling your home to a private conventional buyer is when they decide they no longer want to buy the property and rescind their offer. Unfortunately, buyers can do this any time up to just before exchanging contracts and sellers have no recourse. Builders, by contrast, are usually known, reputable companies that see buying your home as a financial decision, not an emotional one they’ll lose interest in.

No property chain: With a builder you’re selling to them directly, and it’s a simple transaction between the two of you. That means you escape any property chains, where someone wants to buy your house but it’s contingent on them selling their own home – these are often very fragile and can easily collapse, but you won’t have that problem when selling to a builder.

Potential flexibility: Property developers tend to think long-term with their planning, and therefore they might be willing to give you more flexibility on how quickly you can sell, and the date on which you’d have to move out of the property, which can help reduce your stress.

Sell when market slumps: Because they plan many months and years in advance for their investments, some builders could also be less concerned about any near-term drop in the property market and might still want to buy your home during such a downturn. This can be a relief if reduced demand for homes makes it harder to sell your property via other methods.

No home improvements: Sometimes when selling a home, you might think about spending time and money on improvements such as redecorating or fixing problems like dry rot, in order to make it more attractive to buyers. Builders do not need to be convinced this way, if they are interested in your home they will want to buy it without you having to spend any money on trying to make it seem more valuable, so you’ll be able to avoid that potentially large expense.

No viewings: When you sell via an estate agent or auctioneer, you’ll typically have to put up with many viewings where potential buyers come to tour the inside and outside of your property. Many owners find these to take up a lot of their time and to be quite intrusive. If you sell to a builder, they will want to inspect the home, but there’ll be no need for any more viewings.

Disadvantages of choosing to sell a property to a builder

Just as there are advantages of selling your house or flat to a builder, there can also be some downsides. You should carefully review the potential negative aspects of selling this way, because they might be significant enough to make you realise that you don’t want to sell to a buyer and would like to find another option.

Aggressive buying pitch: This is not guaranteed, but some builders might be particularly aggressive with how their pitch their offers to buy your home, if they are highly motivated for financial reasons to own it. You might get inundated with calls, emails and letters from the builder, or you might feel pressured into agreeing to sell fast, even if you feel that you need more time to consider the offer – this can be a stressful situation for owners.

Offering lower prices: Property developers typically have a strong knowledge of the housing market, and they might try to leverage this by making an offer to buy your home that is below the current average value in the area for a house or flat like yours. They might tell you that the lower price accounts for the money that they will have to spend on redeveloping the home once they own it, but this is just an excuse to make an offer that is below what you deserve.

Market still matters: Although some builders might still be interested in buying your home even during a downturn in the housing market and decreasing demand for properties, any negative change in the market can still make it harder to sell your home. Builders might be more selective about what they want to buy, and offer you a lower sale price to reflect the market status.

Keep you waiting: If you’re trying to sell your home quickly, you might be frustrated if a builder is interested in purchasing the property but on their own, possibly slow, timeframe. They might not be ready to immediately buy the house or flat for various business reasons. And during this time they might ask that you sign a "lock out" contract – this would give them the sole legal ability to make an offer to buy your property, blocking out offers from anyone else. This can be problematic if it means you end up waiting months for the builder to make a formal offer.

How to sell your flat or house to a builder

When you sell your property to a builder, there are generally two ways it’s done – either through a conventional sale, or a part exchange. Deciding which approach is right for you is entirely dependent on your unique situation, including your plans for owning your next property.

Conventional sale: This is a straightforward sale through which you the builder will purchase your home and you will move on to another property that is entirely unconnected from the developer. It’s a conventional sale that has the benefit of only involving you and the builder, without any risk of getting involved in a property sale chain that could end up collapsing.

Part exchange: If you sell through a part exchange, you’ll be planning to own and move into a new property constructed by a specific developer. The builder will subtract the sale price of your existing property from the cost that they’ll charge you for the new home that they’re currently constructing. It’s known as a part exchange because you exchange your existing property for part payment on the new house or flat. This can be a great way to move home quickly, if that is your top goal when selling.

Alternative options to find a buyer for your house or flat

After reviewing the strengths of weaknesses of selling your property to a builder, you might decide that it’s not the right match for your unique wants and needs.

If that’s the case, then there are four other ways to find a buyer – you could try selling your house or flat at an auction, you could use an estate agent’s services, you could contact a quick property buyer such as LDN Properties, or you could attempt to sell on your own. Before making a decision, it’s crucial to learn the pros and cons of each method.

You should write a budget for your property sale that specifies the amount of time and money that you are willing to spend, and use that inform your choice on how to find a buyer. Be honest with yourself and make a selection that will still generate profit, even after subtracting any fees.

Selling at a property auction

The first option for finding a buyer is trying your luck with a property auction, although there’s no guarantee that the house or flat will sell, or how much the final sale price might be. Your aim is to have several people eager to buy your home, so that during the auction they keep trying to outbid each other by offering larger prices for it. The end result will hopefully be that the final price is above the typical market value for a home like yours, leading to a decent profit.

With an auction, you will first chose a reserve price, which is the lowest value at which you are willing to sell your home. It’s important that you select a price at a suitable level, even after you subtract the auctioneer’s commission from the sale proceeds.

Just remember that if your property doesn’t receive any bids then it will not sell, and this means you’ll have to start again with trying to find a buyer, creating more delays.

You might be asked to choose between the traditional or modern methods for your auction. The traditional method involves the auctioneer preparing a listing that describes your home and features photographs of it, and then advertising this for a few weeks to generate interest from buyers. Then they host the auction, taking bids for a short amount of time. With the modern method, your listing will be live for a specified amount of time, usually several weeks or more, and people can place bids 24 hours a day, seven days a week, until the listing expires. Whoever places the top bid at that time will be considered the winner and the buyer of your property.

Whichever method you choose, you can expect the sale to take at least a few months. There will be a waiting period of several weeks or longer between the day on which you list the property for sale, and the day on which the auction occurs. And if your home does sell, the buyer typically has 28 days to complete all of their required steps, such as signing various legal documents. You should ask consider asking auctioneers whether they might be willing to reduce the amount of time that the buyer can take to finalise the purchase of your house or flat.

Using the services of an estate agent

The second option you could use for selling your property is to enlist the services of an estate agent. The HOA considers the costs of using an estate agent in this article. They will take on the bulk of the work involved with selling your house or flat, such as preparing the listing, advertising it in local newspapers, in their office, and online, taking calls from potential buyers, scheduling and leading viewings of your home, and helping lead any genuine offers through to completion.

But they charge fees for this effort if it results in finding a buyer for your property. This fee will be taken out of the sale proceeds, which will reduce your net profit, so be sure to factor this in.

Selling through this method can also take a long time, and it’s not unheard of for some properties to remain on the market for many months, or even longer than a full year. That timeline won’t work for homeowners who are looking to sell on the quickest feasible schedule.

And some estate agents are known for telling owners they can sell their property at a very attractive price, yet they secretly realise that buyers will only make offers at a lower value. They pull this trick so that you are hopefully impressed and agree to let them sell your home, and then they will be able to charge you their lucrative fees – but this trick can be overcome.

To avoid falling for this routine, you should check online home sales websites and write down the prices of properties in the neighbourhood that are similar in type to yours. And then ask multiple estate agents for free sale price quotes. Take all of these prices and then work out the average value, and that will be a more honest estimate of your home’s viable sale price.

You should also spend some time online searching for specific estate agents, because this is a simple and speedy way to possibly find any bad reviews or negative publicity about certain companies that can help inform your decision not to use them for selling your home. Alternatively, the search might generate very positive customer reviews and good press coverage, which could give you more ease with using them to find a buyer for your property.

Contacting a quick property buyer

The third option for selling your house or flat is to contact a quick property buyer, like LDN Properties, which makes competitive and rapid offers to buy all types of freehold and leasehold homes throughout London. These companies provide a straightforward, zero-hassle and stress-free way to find a buyer, with some advantages that you won’t get with other ways of selling.

The main benefit of selling to a fast buyer is that the sale will likely be completed within a few short weeks, and that includes exchanging contracts and you receiving the sale proceeds. These companies have the financial power to immediately purchase homes, so they don’t have to wait for several weeks or months to first get approved for a mortgage in order to advance.

Fast buyers will not lose interest in your house just because it has a feature that others might consider a deal breaking problem. LDN Properties will likely still make fair and speedy offers to buy homes regardless of whether they have any flaws, including structural issues like dry rot or major subsidence, a potentially undesirable location such as a high risk flood zone, properties with septic tanks, houses with solar panels, flats that have very short leases, and many other situations. LDN Properties also have experience if you are looking to sell a property portfolio and happy to make you an offer.

That can be a huge plus if you are struggling to generate any interest from developers, or trying to sell via an estate agent or auctioneer, because of issues with your property.

Another top advantage of using a fast home buyer is that the trustworthy companies never make owners pay any commission when purchasing their properties. As a result, you can count on keeping all of the proceeds from the sale of your property.

By contrast, as outlined earlier in this guide, if you sell via an estate agent or auctioneer, they will charge commission and it will be subtracted from the sale proceeds, which will cut the net profit that you can count on receiving. That outcome can be a drawback if you have decided that maximising your profit is the first priority when selling your flat or house.

And you have additional peace of mind when selling to LDN Properties, because it belongs to an organisation called The Property Ombudsman (TPO). TPO publishes policies that are designed to protect homeowners against scams in the quick buying industry, and all genuine members must follow those rules. If you are talking with a fast buyer that either refuses to join TPO, or says it’s a member but cannot prove this fact, be wary about selling to them. Either situation could be a fraudulent business that might result in you losing a lot of money.

The good news is that it is very easy, free and fast to discover whether a quick home buyer is a legitimate member of TPO. Visit the organisation’s website, click on the “Find a Member” tab on the left side of the welcome page, and then you will be asked to enter the name of a specific company. Once you have done this, the website should show you the registration details of a quick buyer that is truly a TPO member. But if the company does not belong to TPO, you will not get any search results – and you should consider carefully before selling your property to them.

Trying to sell the house or flat on your own

The fourth option for selling your home is to try doing so alone, which means that you will be responsible for every step of the sale. You will have to craft a listing for the property, advertise it, take calls from potential buyers, organise viewings and show people around the home, respond to offers, and oversee any serious offers through to completion. This is a lot of work even for a professional estate agent, and it will require a lot of your time, money and energy.

For those reasons, it’s only recommended that you consider this type of sale if you already have knowledge about how to sell a home, or there is a family member or friend with such experience who might be willing to help you out for free. Otherwise, you could be investing a lot of resources into trying to find a buyer with no guarantee about being able to sell your home.

You might get lucky and receive an offer within weeks of putting your house up for sale, but a more likely outcome is that you will be waiting for many months or even more than an entire year before a buyer shows serious interest. This can make selling on your own perhaps the slowest of the choices, and not suitable if you are trying to sell as quickly as is feasible.

The only potential obvious benefit of selling this way is that you won’t have to lose any money with paying a third party, like an estate agent or auctioneer, commission that would be taken out of the sale proceeds. However, you could instead just sell your home to a fast buyer like LDN Properties, as the legitimate companies never charge sellers any fees. That would ensure you get to retain all of the sale proceeds without any of the stress of trying to sell on your own.

Top queries and answers about selling a house to a builder

If you are thinking of selling your home fast – you may have a few questions for us, ranging from the amount of repair work needed before selling through to selling a home in bad condition. Here are some of the top questions when considering selling your property to a builder: