Many lottery winners often buy property right after receiving their prize. Some decide to sell it because it’s not what they need. So, is it worth selling their newly bought home to a property investor? If you are in a similar situation, this guide walks you through the workings of the investment market and provides some handy tips to ensure they snag the finest deal possible.
Defining a property investor isn’t as straightforward as it seems. It could refer to someone who acquires buildings to enhance their value before selling, or it might pertain to individuals who invest in the property ventures of others without getting directly involved in construction or renovation.
Also, property investors adopt a more passive role. They might engage in joint ventures or equity partner agreements. In such arrangements, they provide the capital while other parties undertake the operational aspects. Property investors with substantial funds may opt for more indirect investment paths, like property funds, trusts, or purchasing shares in prominent development companies or property ISAs. They commit their financial resources rather than their time in all these scenarios.
For property investors who purchase buildings to flip or develop, the ultimate goal is a single substantial payout upon property resale.
Why sell to an investor?
Sellers find themselves with several compelling reasons to engage with property investors, although one particular reason often sparks some challenges – keep reading to discover more insights about pricing.
* Purchased “as seen” – When dealing with property investors, worries about the condition of the home being sold are usually minimal. Unlike private buyers searching for their own abode, investors view the transaction as a business move.
* Cash deal – A notable advantage is the absence of uncertainty due to the absence of a chain that might hinder the completion process. Investors do not rely on mortgages or await lender assessments of their financial situation before purchasing. Sellers receive payment via bank transfer, eliminating delays.
* Swift transactions – In most cases, transactions with investors wrap up quickly, typically taking just two to three weeks.
* Investors shoulder the fees – Often, investors are willing to cover additional expenses such as legal fees and property valuations. Opting for a direct sale means avoiding estate agent commissions or auction-related costs.
* Overcoming financial challenges – For those facing financial difficulties, particularly landlords struggling to meet mortgage payments, selling to an investor can offer a speedy and hassle-free solution.
* Inherited homes – Property investors are open to acquiring inherited homes that require updates or even significant renovations, offering sellers a practical outlet for properties with potential.
How much will they pay for a home?
Landlords often ponder a million-pound question: What would an investment company be willing to pay for their property? It’s a question that can make anyone brace themselves, as investors typically aim for a discount to make the deal more enticing. This discount isn’t a fixed number but rather hinges on several key factors, such as the property’s type, its location, and the extent of refurbishments required.
The range of discount offers is quite broad, spanning from 50 percent to as high as 85 percent of the property’s open market value. It’s worth noting that the cash an investor puts on the table will likely be significantly lower than what a seller could get from a private sale facilitated by an estate agent.
Opting for a swift sale to an investor has the potential to save landlords a substantial sum, amounting to several thousand pounds, when you factor in fees and hidden expenses. These concealed costs tend to accumulate over time. They can include items like monthly mortgage payments, council taxes, and utility bills for an unoccupied rental property throughout its time on the market.
What to watch for when striking a deal
Selling your property to an investor might seem like a dream come true, but the journey to finalization is laden with potential traps that sellers must be aware of.
Here are some pitfalls to watch out for:
* Legal fees: While the buyer often promises to cover all costs, it’s smart for sellers to invest in independent legal advice to safeguard their interests
* Last-minute price changes: Beware of situations where buyers let a deal come close to completion and then alter the terms. This can often involve lowering the price suddenly to push the deal through.
* Seek multiple offers: It’s wise to contact three or four different firms to gauge the market and understand your property’s potential value.
Is dealing with an investor risky?
When it comes to working with an investor, you’re not facing any additional risks compared to accepting an offer from a buyer working with an estate agent. The truth is that other buyers are just as prone to backing out, causing delays in the process, or even trying to rework the price before everything is finalized.
If you opt to sell to an investment company, having an independent lawyer review any contracts before you put your signature on them is a good idea. This extra step can provide added peace of mind and ensure you’re making a well-informed decision.
Always get good financial advice.
Look for a qualified expert and it always pays to get a second opinion.