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Investors that buy properties do because they look to profit from them, whether they intend to rent the house or flat out and receive income that way, or whether they plan on improving the home and reselling it at a greater price. This guide details the pros and cons of selling to an investor, along with tips to ensure that such a sale happens swiftly and creates a profit for you.
- What is a property investor?
- Advantages of selling your home to an investor
- Disadvantages of selling your home to an investor
- Tips for getting a better offer from investors
- How to sell your house or flat to an investor
- Other methods available to find a buyer for your house or flat
- Top queries and answers about selling your home to an investor
What is a property investor?
Investment properties are typically considered to be freehold or leasehold houses or flats that an individual, company or other entity buys with the intent of earning income from it.
Some examples include buying a flat and then renting it out, or purchasing a house to renovate or extend it with the goal of reselling at a higher price than what you initially paid for it. The investor might have the financial ability and time available to purchase your home at or near the asking price that you’ve chosen, seeing it as a way to make money.
Property investors include fast buyers like the London-based LDN Properties, a company that offers homeowners a streamlined, hassle-free and no-stress way to receive competitive and speedy offers when selling. Fast buyers use their cash resources to accelerate the timeline for purchasing a property, typically finalising all of the required steps in just a few weeks. These companies are not buying homes in order to live in them, they are buying them as part of a business.
In other situations, an investment property might also refer to a financial decision you make to buy a house or flat in order to help a family member or friend – such as purchasing a retirement home, or when parents provide the necessary funds to help their children buy their first property.
But when most people refer to a property investor, it’s to distinguish them from private investors who want to buy a home to live in themselves for the long term. Further sections of this guide elaborate on the difference between the two types of property buyers, but it can be summed up as private buyers making decisions based on emotions – such as wanting to buy a house or flat where they’d feel happy living – and investors deciding based on finances, meaning they will focus their purchases on homes that could produce the best return on investment.
Advantages of selling your home to an investor
Before you decide on how you’d like to sell your house or flat, it’s important to consider the pros and cons of the various options. A good strategy is to write down how much money and time you can, and are willing, to spend on selling, along with your primary goals. Is finding a buyer quickly your top priority? Is making the most profit your main aim? Be honest with yourself.
A later section of this guide discusses the procedure of selling – such as using an estate agent or trying to find a buyer on your own – and the benefits and drawbacks of each.
Even before you consider the different methods, it can be helpful to learn about the advantages and disadvantages of selling to an investor compared to a private buyer. What you’ll see below is not a definitive list, nor will everything apply to each sale. It’s a useful list of some of the outcomes to expect that can assist you in making an informed decision about selling.
No emotional investment in the property
We’ve already mentioned how investors make home buying decisions based on monetary decisions, whereas private buyers often consider emotions – how they feel about a property as a place to establish a life – as a top factor. This can be an advantage when selling to an investor if your house or flat has a “problem” that causes some private buyers to lose interest – such as mundic property.
For example, you could have a private buyer that thinks your home is their dream property, but it is located next to an unsightly mobile mast, and this is a dealbreaker for them because they cannot imagine living next to the structure. Investors won’t be living in the home and as such they will not have the same thoughts. They’ll be looking at whether they can make a profit through whatever plan they have for the home, and in some cases problem properties might sell quicker to investors.
A recent press report from the Independent suggested that the number of residential properties available to rent in the UK is shrinking, and if there are fewer rental homes, it makes the rental market more competitive, meaning landlords can likely get away with charging higher rent because the number of would-be renters far exceeds the inventory of available homes. If an investor believes that they could rapidly rent out your flat or house at a decent profit after buying it, then they may be willing to pay more than you might have assumed for the property.
Investors can complete purchases quickly
Investors generally have the financial resources upfront to immediately buy properties in cash. This significantly reduces the time it takes to sell an investment property, because the investor won’t have to wait for many weeks or months for a bank or other lending institution to approve a mortgage in order to complete the purchase of your house or flat. Instead, they will be able to offer cash up front, which means that the sale can usually be completed within just a few short weeks.
Can be a lifeline if you’re facing foreclosure
Another advantage of fast buyers and other property investors is that they can be a vital lifeline if you are facing foreclosure on your current home. This happens if you have a mortgage on the property and can no longer afford to meet your monthly loan repayments for whatever reason. If you fall far behind enough on repaying the mortgage, your lender could move to foreclose on the property and sell it, to recoup their money through the proceeds from the sale.
This can be an incredibly stressful situation and may be difficult to resolve on your own without any sudden change in your financial status. But investors can be a quick and stress-free way to resolve the situation, because they have the ability to swiftly buy all types of properties, even those facing foreclosure, allowing you to clear your debt and start anew elsewhere.
Disadvantages of selling your home to an investor
Just as there are several advantages of looking for an investor to buy your home, there can also be some negative aspects. You should know about both the beneficial aspects and the cons to help you make the most informed decision on how you would like to sell your property.
Lack of an emotional investment can lead to lower offers – As explained above, the fact that investors have little emotional attachment to a home can be an advantage when selling. But it can also be a drawback, because they will probably be more willing to walk away from a sale based solely on financial reasons. If you own a problem property, for example because it has subsidence, a private buyer might be willing to overlook that issue because there’s something about the house with which they feel a personal connection. Investors won’t look at homes this way, and if they calculate that the problem will result in a net cash loss from buying the property, they’ll lose any interest in it.
Buyers might be aggressive with lower price offers – Although many investors are professional and polite, it’s possible that you could encounter a buyer who tries to pressure you into selling your flat or house at a vastly discounted price. They might try all kinds of tricks to convince you that your property is worth less than it actually is, and a worst case scenario could lead to you selling at a loss. It can be quite stressful for homeowners to experience aggressive or misleading talk from investors trying to pressure them into selling at a price that will greatly benefit the buyer but not the owner. Thankfully, there are plenty of legitimate investors such as London-based quick buyer LDN Properties that treat owners with respect and make fair and fast price offers.
Tips for getting a better offer from investors
One recent press report describes property investing as "a reliable opportunity for maximising returns amidst low-interest rates and incredible demand," particularly if property prices increase over the coming years. Some homeowners might think that the relatively stable interest in purchasing houses or flats as an investment could ensure they’ll always get a generous offer from buyers. That’s not the case, and as explained earlier in this guide, some investors will make offers below your asking price. Thankfully, there are some useful tips for how to hopefully get a better offer from investors.
Spend time to get your property in pristine condition for investors – First impressions count when selling a home, regardless of the type of investor that you’re trying to attract. If your property shows signs of being need in repair, it will likely make the buyer look at the flat or house in a more negative way than if it was in perfect condition. For example, if the paint on your front door and window ledges is chipped, or there are cracks in the windows, missing roof tiles or a garden overgrown with weeds, the effect of this appearance will often by that the buyer thinks the home is in poorer condition and therefore worth less money. And this is regardless of whether the buyer has any intention of investing in any repair work, because the sight of a poorly maintained home on its own can lead to lower-value offers. Therefore, a simple step that you can take to entice more investors at a better sale price is to get the property in a decent condition. This doesn’t have to be a hugely expensive or time-consuming process – it might be as simple as giving your front door a fresh coat of paint, or mowing the lawn. Exerting that effort can have a surprisingly beneficial impact on how investors look at your house or flat, which in turn might lead them to offer more money for it.
Research and pitch investors on the financial benefits of your home – Making money is however the primary driver for investors, and understanding this can help you plan for how to get them more interested in buying your home. When selling, do some research on home sales websites to see how much properties in the area that are similar to yours have sold far recently. If your asking price appears to be a great deal compared to recent past sales, don’t be shy about saying this to investors. They want to think they’re getting a bargain. You can also research your neighbourhood and any recent or upcoming developments that may make your home even more attractive to investors. One scenario might be that a business plans to build a large office in the area for hundreds of employees – some of them will need a place to live, and if your home is located nearby, perhaps an investor make money by renting it out.
How to sell your house or flat to an investor
Fast home buyers like LDN Properties can be a great investor option for selling your home. These are professional, trustworthy companies that give owners a streamlined and no-stress method for receiving fast and fair offers for selling their homes. They can buy homes in cash quickly, completing most purchases in a handful of weeks – and that includes the time that it takes to exchange contracts, pay you the proceeds, and complete all of the other steps.
The process of selling to a fast buyer starts by calling them, and then often within the first hour of talking they should be able to make an initial offer for buying your property. You should have at least seven days to think about the offer, so there is no need to make an instant decision.
If you decide to accept the initial offer, the fast buyer will usually then send a representative to assess the outside and inside of your home before the company makes a final offer. This is also a perfect time to ask the representative any questions that you’ve still got about selling.
And the final step is when the company works with your solicitor to quickly sign all of the required legal paperwork and finalise all of the other mandatory steps. It’s typically much speedier than the average home sale timeline through other options like an estate agent or auctioneer.
Legitimate fast buyers also often never charge homeowners any commission when selling, which means you would be able to count on keeping the full proceeds – unlike using an auctioneer or estate agent, whose fees will be taken out of the proceeds and reduce your profit accordingly.
Other methods available to find a buyer for your house or flat
Besides using a fast buyer like LDN Properties, there are other ways to find an investor who wants to buy your home – you could try selling it through an auction, use an estate agent, or spend time and money trying to secure a buyer on your own. There are benefits to each approach, but also some rather important negative aspects that you should learn about.
Trying your luck by selling a property through an auction
Any type of auction – whether for a home, furniture or anything else – is a gamble, because you never know what the final sale price will be. That unpredictability can be attractive to some sellers, who believe that their flat or house will be in high demand, prompting several people to keep trying to outbid each other with ever-increasing price offers.
Although that is one potential outcome, it’s also possible that you will not receive any bids on your property, which means that your house does not sell and you have to start over with finding a buyer. This outcome can add a significant amount of time to the process of trying to sell your home.
Or you might only get a single bid at the reserve price, which is the lowest value that you’ve told the auctioneer you’ll accept for selling your property. A winning bid is considered a legally binding agreement to sell the home that the buyer could sue to enforce if you try to back out. That’s why you must choose a reserve price that you are happy with, even after you deduct whatever commission the auctioneer charges from the sale proceeds.
Auctions can be popular with investors because they get the chance to consider making offers on a large number of properties at once, rather than having to pursue individual purchases. But just because investors attend auctions does not mean they will be interested in your home.
You might be offered either the traditional or modern method of auction. The traditional method involves the auctioneer creating a listing – which features text describing your home, along with photographs of the interior and exterior – and advertising that for several weeks or longer. Then they will host the auction on a specific day and receive bids for a limited time. With the modern method, the listing will be able to receive bids as soon as it is public, and the winner of the auction will be whoever placed the highest value bid when the listing eventually expires.
Regardless of which method you choose, auctioning can be quite a lengthy process for selling your home. You’ll have to wait many weeks or more between the date on which you submit your property for sale and when the auction ends. And if the house or flat sells, the buyer usually has about 28 days to sign all of the required documents and complete their other required tasks. Some auctioneers might give buyers more time for this work and others may allow less time, therefore you should always ask individual companies what deadline they give to buyers.
Enlisting the help of an estate agent to sell your home
Using an estate agent to sell your home takes much of the burden on finding a buyer away from you. It will be the company’s responsibility to put together and market a listing for your property in their office, online and in local newspapers and other media. They will also take calls from prospective buyers, schedule viewings, and lead people on tours of the house or flat.
But there are some drawbacks of selling this way, not least being the fact that many homeowners report viewings to be quite intrusive and to take up a lot of their free time.
Also, there is no guarantee about when you will find a buyer – in some cases it may only take days or weeks, but in the vast majority of situations you could be waiting for a number of months, or even more than a full year, before you get a serious offer seen through to the end. That’s far from ideal if your main priority when selling is securing a buyer as fast as possible.
Be aware that some estate agents might tell you that they can sell your property at what seems like a very attractive price, even if they secretly know that you’ll only attract offers at a lower value. They use this trick hoping that the elevated price will persuade you to use their services to find a buyer, because they stand to earn commission if they sell the property – but thankfully it’s easy to avoid falling for it.
The possible solution is to first look at home sales websites such as Rightmove or Zoopla and see how much properties like yours in the surrounding area have sold, or are selling, for. Next, call, visit or email other estate agents and ask them for quotes about your home’s potential sale price. Then calculate the median of all those values to get a more accurate estimate of how much you can ask for your flat or house.
You should also ask estate agents about their success rate with selling investment properties, because some companies might have no experience with securing buyers for this type of flat or house. If an estate agent has never managed to sell an investment home, it’s very likely that they won’t know to attract interest in your property and it will take a very long time to sell.
Attempting to sell your property without any assistance
The last, and often least popular, option for sellers is trying to find a buyer on their own, without any assistance from an auctioneer or other third party. Selling on your own means that you have the sole responsibility for preparing the listing, advertising it, scheduling viewings, taking potential buyers on tours of the home, and trying to finalise any genuine offers that you get.
This is a huge undertaking and will require a lot of effort, money and time, and it’s very unlikely that you will be able to do this solely in your spare time. For that reason alone, you should be cautious about pursuing this option unless there is a friend or family member that has strong experience with selling properties and who is willing to help you out for free.
Without that support, the timeline for selling your home will be incredibly unpredictable and it might take many months or even more than an entire year before you get one offer.
Compared to other methods on this list, there are few clear benefits of selling on your own besides the fact that you will not have to pay an estate agent or other entity any fees for helping with the sale. Yet it’s possible to achieve this exact outcome without any of the stress by selling your house or flat to a fast buyer, because the legitimate companies don’t charge commission.
Top queries and answers about selling a house to an investor
Homeowners thinking of selling their home quickly typically have a few questions for us, ranging from should they sell to an investor through to selling a home in bad condition. Here are some of the top questions we’re asked about selling a property to an investor:
Your top questions when selling property to an investor
Investors are looking at your property as something they intend to make a profit from, whether that’s renovating the home and selling it at a higher price in the future, or using it to rent out and make money that way. They are different from typical buyers like families, who are more interested in homes as a place to live for many years with which they feel a connection.
Remember that investors are looking at your house or flat as a financial decision, and whether they can make any money from it. Tell them if your asking price is good market value compared to similar properties, or how viable it might be for renting or reselling. Make sure the interior and exterior of your home are in good condition, as this can make it seem more valuable.
Every home sale is unique, and whether it’s better to seek an investor or private buyer will depend on your own needs. Generally, however, investors have the funds to give you a very fast sale although you might need to accept a lower asking price. Private buyers could take longer to buy your home, but if they truly love it then they might be willing to pay more.
Fast home buyers like LDN Properties have the resources to make speedy cash purchases of houses and flats, without any delay whilst waiting for getting a mortgage approved. This significantly shortens the sale process and means that these investors can often finalise the purchase of a home – including exchanging contracts – within just a few short weeks.
An organisation known as The Property Ombudsman (TPO) writes rules for how fast home buyers must conduct business, designed to shield owners against bad practice in the quick buying industry. Check whether a specific fast buyer is a member of TPO, and if they are, then they will adhere to those regulations, which should give you extra peace of mind when selling.
No. It’s possible that there might be several property investors at the auction of your home and they want to buy it, but it’s also just as possible that there are no investors or other buyers at the auction who want to purchase your house or flat. If your home does not receive any bids, it will be considered unsold, and you will have to begin again with trying to find a buyer for it.
