Selling House To A Developer

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Property developers in the UK sometimes make competitive offers to buy various types of freehold or leasehold houses or flats, particularly in areas where they’d like to build more homes. Although there can be some benefits from selling this way, there are also some possible drawbacks, and you might find another option to ensure a speedy and reliable sale.

1. What is a property developer?
2. Advantages of selling your home to a developer
3. Drawbacks of using a property developer to sell your home
4. Two methods for selling a home to a property developer
5. Consider other methods for selling your house or flat
6. Key questions about selling your home to a property developer

What is a property developer?

Becoming a property developer has long been a major interest for many investors in the UK, although the phrase can cover several different types of home buying and selling.

One way that someone can become a property developer is if they buy freehold or leasehold houses of flats not to live in as their private residence, but to use as buy-to-let homes. These properties are rented out to tenants in exchange for a monthly or annual rent, which provides the owner ideally with a steady source of extra income. Some property developers use that extra money to purchase further buy-to-let homes, and if they own two or more, they have a property portfolio.

Another type of property developer is one that buys homes with the intent of renovation or extending them, or both, and then in the coming months or years reselling them at a profit without ever living in the house or flat as a private residence. This type of property developer could be a single investor who "flips" properties this way one at a time, or it could be a high-value company that routinely buys and renovates many homes at the same time.

And yet another way that someone or a company can be a property developer is the rarer instances where they want to purchase an existing house in order to demolish it, and then build on that land as part of a larger development plan. You’ll find that this is typically the least common type of property developer, although these transactions do sometimes still occur.

There are benefits and drawbacks to selling your home to a property developer, just as with the pros and cons of other types of trying to find a buyer. This guide elaborates on the various elements of the process of selling your flat or house to a property developer, and also offers advice on alternative methods for selling quickly and at a profit that might appeal more.

Advantages of selling your home to a developer

Many homeowners sell their flats or houses to property developers each year, and that’s because there are specific advantages that they get to enjoy from the sale. Below you’ll find a short explanation of some of the key benefits that you might experience with this option:

Can leave flaws unfixed: Your home might possibly have a structural problem, such as dry rot, a bad roof, vandalism, subsidence, or something else. Some private buyers could see that flaw as enough to no longer want to buy your home, as they may not be willing to spend the time and money on fixing the problem once they own the property. Developers, by contrast, have access to cheaper materials and other resources when renovating properties, and they are likely to be more willing to make a decent offer for buying the home without you having to first fix the flaw.

Emotion-free sale: Property developers are less likely to lose interest in buying your home just because it has a feature that some private buyers might deem to be a deal breaking problem. For example, your home could be everything that a private buyer is looking for, but it happens to be located close to a mobile phone mast and that’s enough to make them walk away from the sale. A property developer will have no such emotional investment in the property, and they will assess it purely on how much money they think they can make from it. If they do not believe that the problem will massively affect their investment plans, they will still push ahead with buying the house or flat.

No need for viewings: Some homeowners find viewings – where potential buyers come to tour the house or flat for sale – as one of the worst parts of selling, because they take up a lot of time and can be quite intrusive. When you sell to a property developer you avoid having to put up with viewings, other than an inspection from a designated representative of the developer.

Market matters less: Property developers make very long-term plans, usually several years into the future, and so they are less likely to suddenly lose interest in buying your house or flat just because of a sudden negative change in the housing market. That compares favourably to private buyers, who might get nervous about buying a property during a market downturn. Property developers can therefore offer more security about selling even in those moments.

Break away from the chain: Property sale chains occur when someone wants to buy your home, but they have to wait on the sale of their existing house or flat in order to obtain the necessary proceeds to complete the purchase of your home. Property chains can be notoriously fragile, and if just one of the sales involved falls apart, the entire chain will collapse and you’ll have start anew with trying to find a buyer for your home. When you sell to a developer, it’s a straightforward one-on-one transaction that avoids any need to be caught in a sale chain.

Drawbacks of using a property developer to sell your home

Just as there are several potential advantages of using a property developer to sell your house or flat, there are also a few disadvantages that it’s useful to know about before making a decision. Note that several of the below drawbacks can be avoided entirely by using other methods of selling, such as using a fast home buyer, detailed further in this guide.

Potentially lower sale price: It’s possible that some property developers might try to convince you that your home is worth less than a price some private buyers could be willing to pay. They sometimes try to do this by claiming a superior knowledge of the property market, and will try to overwhelm you with statistics in a bid to encourage you to accept a reduced sale price.

Harder to sell derelict homes: Some recent press reports suggest it can harder to find a property developer willing to sell a home that is derelict, because these houses or flats can take a much longer time to renovate to a point where they can be resold at a profit.

Delayed decision making: Although one benefit of selling to a property developer is that they might be more flexible with the schedule for you moving out, this can also work to your detriment. A developer might keep you waiting to complete their end of the process for buying your home. During this period, you could be asked to sign a "lock out" contract that would give the developer the sole legal authority to purchase your property – an agreement that effectively keeps you waiting for the developer to act, and prevents anyone else from buying the home.

Aggressive buying methods: If a property developer is very eager to buy your house or flat, they might be particularly aggressive about trying to convince you to sell. You could receive countless emails and phone calls every week asking whether you’ve made a decision on selling to the developer, and this endless contact can feel very stressful for many homeowners.

Two methods for selling a home to a property developer

Whenever a property developer contacts you about buying your home, or you reach out to them when trying to sell your house or flat, there are typically two ways that the transaction will work, either a conventional sale or a part exchange. As the details below explain, there are certain benefits to each approach, although the right choice will depend on your unique needs.

Part exchange: This happens when you intend to purchase a home from a property developer. The person or company will, as part exchange, buy your existing flat or house and then discount the price of the property from whatever the asking price might be for the home that you are buying from them. Some homeowners like this situation because it not only ensures the sale of their current property, but it also speeds up their ability to buy and move into a new home.

Conventional sale: This happens when you make a direct, simple transaction with a property developer through which they pay you a set amount in exchange for ownership of your home, and there are no other significant elements to the deal. You will most likely then use the proceeds from the sale to help you with the purchase of your next home, but not with the specific intention of buying the future flat or house from the developer that you sold to.

If you’ve reviewed all of the preceding information about the pros and cons of selling your home to a property developer, including the various options for how the sale can happen, and are no longer interested in this approach, you’ll find details on alternative selling methods in the next section of the guide. They outline four distinct choices for finding a buyer, although the different approaches have varying timelines, and some include fees that will reduce your sale profit.

Consider other methods for selling your house or flat

If you have decided against selling your house or flat to a property developer, the next step will be to choose among the various remaining options for trying to find a buyer for the home.

The typical choices for selling your home are doing so via an estate agent, at an auction, on your own, or to a quick buyer like LDN Properties. Below you’ll find detailed information on the pros and cons of each method, including how long they take and how profitable they might be.

Before making a final choice, you should write a budget for the sale of the home that accounts for all possible costs, including how much time and money you’re willing to invest in the selling process, and the amount of profit that you need or want to make. Then use this information to help in deciding on the approach to selling that works the best for your unique situation.

Selling your property via an estate agent

One of the most common ways that people sell their properties is enlisting the help of an estate agent. They will start by preparing a listing for your home, which will describe its main features and also feature photographs of the inside and outside. The estate agent will advertise this listing online, in local newspapers, and in their office to generate interest from buyers.

Estate agents will take calls from any potential buyers, and organise viewings where they will show people around the property. Note that some homeowners find viewings to be incredibly disruptive and time-consuming, and a major drawback of this approach to selling.

An estate agent will also handle any serious offers from buyers, and oversee them ideally through to completion. Just know that it can often take many months to find a buyer when selling this way, and it might even be a full year before you are able to sell your home. If your main priority with selling is doing so as quickly as possible, you should consider other methods.

You will also have to pay commission based on your home’s final sale price when selling via an estate agent, although some companies might charge higher or lower rates, or may be willing to negotiate a different rate. The fee will be automatically deducted from the sale proceeds, which will reduce the net profit that you count on making. As a result, sellers who want the most profit possible should consider finding a buyer another way.

Some estate agents are also known for quoting owners unreasonably high valuations for their homes, even if they secretly understand you’ll only get offers at a lower price. They do this to win your business, so that they’ll get paid by the commission they will charge when securing a buyer for the property.

But it’s very easy to avoid falling for this behaviour with some simple steps. First, browse home sales websites like Rightmove and Zoopla and check the current and past prices of properties in your neighbourhood that are similar to yours. Second, ask several estate agents to give you free quotes for the price at which they think they can sell your home. Finally, calculate the average value of all those prices, and this should give you a much more accurate estimate of the most reasonable asking price to set for your house or flat.

Selling your property at an auction

Alternatively, you might be thinking of using an auction to sell your home. An auctioneer will prepare and advertise a listing for your house or flat, and host the auction when people can place bids on a property, with the highest bid at the end of the auction declared the winner.

This can be a gamble, because it’s impossible to know what the final sale price of your property might be. The goal is to have many people interested in your home, so that they keep trying to outbid each other with ever-increasing price offers on the property, resulting in a decent profit. However, there is no guarantee that this outcome will happen when you sell via an auction.

You could get zero bids, in which case your home will not sell and you will then have to start over with trying to find a buyer. This can add a frustrating delay to the sale of your property, especially if you’re trying to sell in a hurry. Or you might get just one bid at the reserve price, which is the lowest value at which you are willing to sell the flat or house. Ensure that you select a reserve price that will result in a profit, even after subtracting the auctioneer’s fees.

Most auctioneers charge commission based on your property’s final sale price, which will be subtracted from the proceeds, in turn lowering your net profit.

Another important consideration is the time that it could take to sell your home this way, because auctions usually will take a few months from beginning to end. There’s typically a wait of at least a few weeks between the date on which you list your home for sale, and the date on which the auction takes place. And even if your property sells, the winning high bidder then often has about 28 days to finish all of their required steps to complete the purchase.

An auctioneer might ask you to choose between the modern method or traditional method of selling your home. With the modern method, your auction listing will run for a set amount of time, such as a month, and people will be able to place bids on it 24 hours a day, seven days a week, until the auction ends – at which time the highest bid is the winner. With the traditional method, your listing will be advertised for several weeks but people will only be able to place bids on the day of the auction, and bidding will only last for a very limited amount of time.

Selling your property on your own

Some homeowners attempt to sell on their own, meaning they avoid the services of a third party like an estate agent or auctioneer. This puts the sole responsibility on them to develop and market a listing for the home, schedule and host viewings for anyone potentially interested in buying the property, and entertaining any serious offers, ideally through to completion.

This is a large amount of work even for professionals, and it will require a lot of your money, effort and time. It’s not recommended unless you have any experience with selling homes, or you have a friend or family member that has such knowledge and is willing to help. Otherwise, you risk creating a significant amount of stress with relatively minimal reward in exchange.

It can take a long time to sell this way, and even though a home might sell within weeks in rare cases, when selling solo it is more likely to take over a year, or at least many months.

Possibly the only clear advantage of selling on your own is that you will not be required to pay a third party commission for finding you a buyer, which means you keep all of the sale proceeds. At first, that might seem an excellent choice if your top goal is maximising your profit.

But, as will be described next, you can achieve the same outcome of not paying any fees for selling your home yet without any of the stress involved of selling on your own, if you use a quick buyer like LDN Properties. These companies can not only provide a zero-commission way to sell your home, but they’re often by far the speediest way to find a buyer for a property.

Selling your home to a quick buyer

You could alternatively think about selling your house or flat to a quick buyer like LDN Properties. These companies have the financial resources available to make immediate purchases of homes, without having to wait weeks or months to first get approved for a mortgage to complete the sale. As a result, the typical timeline involved with a fast buyer is usually just a few weeks from beginning through to exchanging contracts on the property.

Another important benefit of using a quick home buyer is that the legitimate companies will never make owners pay any fees for selling their properties. For example, LDN Properties believes that owners deserve to receive the full proceeds from whatever final sale price the company offers to quickly buy their homes.

Quick buyers are also often able to consider making speedy and competitive offers to buy many different ages, conditions, shapes, sizes and types of properties compared to other buyers. The lengthy list of offers that LDN Properties has made throughout London includes properties with solar panels, flats with very short leases remaining, houses with high levels of radon, properties suffering from dry rot or some other widespread and significant structural issue, homes constructed using non-standard materials such as concrete, flats with noisy neighbours, vandalised properties, and more.

And for your extra peace of mind, the legitimate quick home buying companies are typically registered with a third party entity known as The Property Ombudsman (TPO). This organisation publishes policies that aim to shield owners from possible fraud in the fast buying industry, and all members must commit to following those rules, which gives you additional protection.

It is easy, free and fast to check the membership status of a quick home buyer by visiting TPO’s website. On the welcome page, look for the "Find a Member" tab and click on it, and you’ll then be prompted to enter the name of a specific company. If they are truly registered with TPO, you’ll be able to see their membership details. If a company tells you it’s a TPO member but no registration details appear, of if a quick buyer tells you it refuses to join the organisation, then you should be very wary about selling to them because it might not be a legitimate business.

Top queries and answers about selling a house to a developer

Homeowners thinking of selling their home quickly usually have a number of questions for us, ranging from the amount of repairs work they should do before selling through to selling an unmodernised home. Here are some of the top questions and answers we’re asked about selling a property to a developer: