What is a cash house buyer?

A cash house buyer is a company or investor that buys homes directly from their owners, using money it already has rather than a mortgage. Because there's no lender and no chain to wait for, a cash sale can complete in weeks instead of months. The trade-off is price: cash buyers usually pay below market value, because they need to cover their costs and make a profit when they resell or let the home.

This guide explains how these companies work, how a sale goes step by step, why the offers are lower, and who a cash sale suits. It's general information for England and Wales.

What does a cash house buying company do?

Most cash house buying companies buy homes, sometimes refurbish them, and then sell them on or rent them out. They advertise speed, certainty and simplicity: no viewings, no estate agent, no chain, and often no fees.

When the Office of Fair Trading (OFT) studied what it called the "quick house sale" sector in 2013, it found three quite different kinds of business, which can look the same from the outside:

Type	What they actually do	What it means for you
Buyers	Buy the home themselves, to resell or let	The most control over speed and price
Brokers	Agree a price with you, then look for an investor to buy it	Less certainty; the deal depends on them finding someone
Lead generators	Collect your details and pass them on to other firms for a fee	They can't buy your home or promise anything

The OFT said brokers are likely to be doing estate agency work, which means they must belong to an approved redress scheme. It also found that most providers presented themselves as buyers, but that this might not always be true. So the first question to ask any "cash buyer" is simply: will you be buying my home with your own money?

How does a cash house sale work?

The steps are broadly the same with most genuine buyers:

1. You tell them about your home, online or by phone.
2. They work out its market value, usually from recent sales of similar homes nearby, and make a first offer below that.
3. They inspect the home, sometimes with a surveyor, to check its condition.
4. They confirm their offer. Get the final offer in writing and ask what, if anything, could still change it.
5. Solicitors do the legal work. The buyer's solicitor checks the title and searches; yours prepares the contract and deals with your mortgage.
6. You exchange contracts, when the sale becomes legally binding.
7. You complete, on the date you've agreed. The money is paid, your mortgage is cleared, and you hand over the keys.

Nothing is legally binding in England and Wales until contracts are exchanged, so a cash buyer can still lower its offer or pull out before then, just like any other buyer. The OFT found that late price cuts were one of the sector's biggest problems, which is why getting the final offer in writing matters so much.

Why are cash offers below market value?

"Market value" is roughly what your home would sell for on the open market, given proper marketing and a reasonable amount of time. A cash buyer pays less because it takes on costs and risks that an ordinary buyer doesn't:

• Buying costs, including Stamp Duty (or Land Transaction Tax in Wales) and legal fees, often both sides' legal fees.
• Work on the house, from redecorating to new kitchens, roofs or rewiring.
• Holding costs while the work is done and the home is resold: council tax, insurance, utilities and finance.
• Selling costs when they sell it on, such as agent's fees.
• Risk, because prices can fall and building work can cost more than planned.
• Profit, because that's the business.

How much lower? In its 2013 study, the OFT found sellers typically gave up between 10% and 25% of their home's market value, and occasionally much more. Every home and every buyer is different, so compare any offer with your own estimate of value. Our guide to below market value explains how to judge whether an offer is fair for you.

The pros and cons of selling to a cash buyer

Pros	Cons
Can complete in weeks, sometimes as little as 7 days	Usually below market value
No buyer's mortgage, so no lender's valuation or mortgage offer to wait for	Not every "cash buyer" is a real buyer
No chain on the buyer's side	Offers can still be cut before exchange
Usually no viewings or marketing	Some firms charge fees or use long lock-in agreements
Many buy homes as they are, including ones lenders won't lend on	You don't test what the open market would pay
Often no agent's fee, and some pay your legal fees	Pressure to decide quickly from some firms

Who does a cash sale suit?

A cash sale can make sense when speed or certainty is worth more to you than the extra money an open-market sale might bring. For example:

• Inherited homes, especially when the house is empty, the bills are mounting and the executors live far away.
• Homes that are hard to sell, such as those with structural problems, a short lease or non-standard construction, which some buyers can't get a mortgage on.
• A broken chain, when you need to sell now to keep your next purchase.
• Relocation, separation or ill health, when you need a fixed date.
• Sales that keep falling through.

Your House Bought is one such buyer, a trading name of TT Massive Marketing Limited. We buy homes in England and Wales with our own money, make an offer within 24 hours, buy homes as they are, pay your legal fees and let you choose the completion date. Our offer is below market value, we explain how we worked it out from recent sales nearby, and there's no obligation to accept.

Who doesn't it suit?

• If your home is in good condition, sells easily locally and you can wait a few months, an estate agent will usually get you more money, even after their fee.
• If getting the highest price matters more than speed. An auction or a well-priced agent sale may be better.
• If you're behind on your mortgage and haven't yet spoken to your lender or a free debt adviser. Talk to them first: MoneyHelper, Citizens Advice, StepChange and National Debtline are free and independent. A quick sale is one option among several, not the first one. See how to stop repossession.

How it compares with an estate agent and an auction

An estate agent usually gets the highest price, but GOV.UK says an average sale takes about 5 months, and longer in a chain. A traditional auction is binding when the hammer falls and usually completes within weeks, but you pay auction fees and the price depends on the bidding. A cash buyer is usually the quickest and simplest route and the lowest price. Our side-by-side guide, cash buyer vs estate agent vs auction, goes through price, speed, certainty and fees.

What to check before you agree

Before you accept an offer from any cash buyer:

• Ask whether they're buying with their own money, and ask for proof of funds.
• Look the company up on the official company register.
• Check whether they belong to The Property Ombudsman, which has a Code of Practice for property buying companies, or the National Association of Property Buyers (NAPB), whose members sign up to that code.
• Get your own legal advice, and read any agreement before signing it, especially anything that stops you selling elsewhere.
• Ask for every fee in writing, and what happens if the price changes.

Our guide on how to check a cash house buyer goes through each check in detail.