On face value it can appear as though selling your home privately does not make financial sense. This is particularly the case where you are offered a price that represents a large discount off the price you wish to achieve on the open market.
However, a closer look at the situation may reveal that selling your home in a short space of time for a reasonable discount makes perfect sense.
These days there are hundreds of companies and individuals who offer to buy property from people who are looking for a quick sale. Most of these businesses make offers in the region of 75-90% of the market value of the properties. In return they offer to buy the property quickly and in some cases they pay for costs such as legal fees.
At first glance this may seem like financial suicide. However, if you calculate how much money it can cost to sell your home on the open market the discounted price may not seem so low after all.
First of all there is the estate agent’s fee. This is payable upon selling the property and is usually around 2% of the final selling price in the UK. This can account for a significant chunk of the final selling price and raises the question of whether the value of the fee should have been discounted from the market price earlier on in order to trigger a fast sale.
Additional fees for selling your home through an estate agent will also include legal costs and a survey fee. Depending on how long the property remains on the market, if it is vacant and there is a mortgage secured on it you will be liable to pay several mortgage payments as well.
If instead you accept a discounted price for your home upfront you may not be liable to pay for these costs. Businesses that offer to buy your home quickly will usually pay for legal and survey fees and will take the property off your hands quickly meaning that you will not be liable to make further mortgage payments.
These additional costs can account for a few extra percentage points off the market price of your home. When added to the estate agent’s fee the total outgoings you will be liable to pay from selling your home on the open market could be between 5-10% of the final selling price.
Finally, your home may not achieve the advertised price set by the estate agent. It is likely that you will have to provide a discount of around 5-10% in order to secure a sale.
It is now clear to see that the apparent discounted prices quoted by companies offering you a quick sale in order to buy your property may make financial sense after all.
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