FAQ
How Much Below Market Value Do Cash Buying Companies Pay?
Cash buying companies pay 15 to 30 percent below market value, and sometimes more for a flat with serious problems. An individual cash buyer who finds your flat through an estate agent usually pays more, around 85 to 90 percent of value, but takes months and can still withdraw. This page is about the companies. It includes a worked example on a £300,000 flat so you can see what you would be left with on each route.
The Short Answer, and Why It Is a Range
Every cash buying company's website says it pays "up to" a high percentage of market value. The "up to" does the work. This page sets out what the discount really is, where it comes from and how to check an offer against it, using the same figures we use ourselves. Our cash buyer Top 10 covers the wider questions of speed, fees, what to sign and how to check a company. This page is only about the price.
Sell Flat UK is a cash buying company, and our offers sit inside the range described here. We have written the page because sellers who know what a fair cash offer looks like are quicker to recognise one, and quicker to walk away from a bad one. Where another route would leave you with more money, the page says so. This is general information, not financial advice.
Two Kinds of Cash Buyer, Two Different Prices
"Cash buyer" covers two very different people. The first is an individual who happens not to need a mortgage: a downsizer with the proceeds of a house, an investor with funds in the bank, a parent buying for a child. They are not buying direct: they find your flat through an estate agent like any other buyer, after you have paid to market it. They pay close to the full price, typically 85 to 90 percent of market value, because they are buying a home or a long-term investment and competing with mortgage buyers for it. The agent's commission then comes off that price. What they offer in return is a sale without a lender: no mortgage valuation, no lending criteria on the block, fewer reasons to fall through. They still take the agent's months, still have a survey done and can still withdraw before exchange.
The second is a cash buying company: a business that buys direct from you, with no agent, no marketing and no commission, to resell or let the flat, using its own funds, in weeks. It pays 15 to 30 percent below market value because it carries costs an individual does not, as the next sections explain, and because what it sells you is speed and certainty rather than a home for itself. Sell Flat UK is this second kind, and so is every "we buy any home" company you will find online.
The rest of this page is about the companies. If your flat is mortgageable and you have time, an estate agent will usually find you an individual cash buyer or a mortgage buyer at a better price than any company will offer, and you should take that route. The company route earns its discount where the agent route is slow, uncertain or closed to you.
What "Market Value" Means Here
Market value is the price the flat would actually sell for through an estate agent, to a buyer with time to arrange a mortgage, in the state it is in today. It is not the asking price, and it is not the highest of three agents' valuations. Agents compete for instructions by quoting generously, and a flat that goes on at an optimistic figure typically sells after one or two reductions. The number to anchor on is what comparable flats in the same block or street have sold for in the last year, which you can check free on HM Land Registry price paid data.
Two adjustments matter. First, the flat as it is, not as it could be: a flat with 68 years on the lease is compared with other short lease sales, not with a flat upstairs that sold last spring with 120 years. Second, the realistic buyer: if lenders will not lend on the block, the open-market buyers are investors and cash buyers anyway, and the price they would pay through an agent is the market value, not the figure an owner-occupier might have paid for a mortgageable block next door.
Get this number right and the rest of the page follows. Get it wrong, by comparing a cash offer with an inflated asking price, and every cash offer will look worse than it is. Compare it with a realistic sold price and you will see the company's discount for what it is. Our pricing mistakes guide covers how to arrive at a realistic figure.
Why the Discount Is 15 to 30 Percent
The discount is not a margin plucked out of the air. It is the sum of what the buyer gives you and what the buyer has to pay.
What you get is speed and certainty. A cash buying company completes in weeks rather than months, does not need a mortgage, does not sit in a chain and does not walk away after a survey. For a seller with a deadline, an empty flat costing money every month, or a sale that has already collapsed, that certainty has a cash value, and the discount is its price.
What the buyer pays is more than most sellers realise. Stamp duty on an additional dwelling carries a 5 percent surcharge on top of the standard rates, so on a £240,000 purchase a company pays around £14,300 in tax before it owns the flat. Add legal costs on the purchase and later sale, the holding costs while it refurbishes or lets the flat, the cost of money tied up for months, the risk that the lease or the building turns out worse than expected, and a margin for the business to exist. Take those off the resale value and 70 to 85 percent of today's value is roughly where a company can pay and still make the trade work. An individual cash buyer pays none of these costs, which is why they can pay 85 to 90 percent and why the two should never be compared as if they were the same thing.
That is also why "we pay full market value" claims should make you suspicious. A company that paid full value could not cover its stamp duty, let alone its costs. Either the "market value" it has in mind is a low one, or the offer will fall before exchange.
What Moves an Offer Up or Down Within the Range
Within 70 to 85 percent, five things decide where a particular flat lands:
- Lease length. Above 90 years, little effect. Between 81 and 90, the buyer prices in an extension soon. At 80 or below, marriage value makes extending dearer and the offer drops accordingly. Below 70, the resale market is cash only, which the buyer prices in again.
- Condition. A flat that needs a kitchen, a bathroom and rewiring costs the buyer money and time before it can be sold or let, and the offer reflects a realistic refurbishment budget plus a contingency.
- The block and the lender position. A block most lenders accept resells to anyone. A high-rise, deck-access or non-standard block resells to investors only, so the buyer's own exit is narrower and the price lower.
- Location and demand. A flat in an area where stock sells in weeks is easier to resell than one where it sits for months. The buyer's risk is lower, so the offer is higher.
- Known costs coming. A section 20 notice, a cladding programme with a leaseholder contribution or a ground rent that doubles are all deducted from the offer, because the buyer will have to pay them.
How urgent you are matters less than sellers fear. A genuine company prices the flat, not your situation, because its costs and resale risk are the same whoever is selling. Where urgency does cost you is in the time you have to compare offers: a seller with a week cannot shop around, and that is when a poor offer gets accepted.
A Worked Example: What You Walk Away With on a £300,000 Flat
Take a two-bedroom flat with a long lease, in good condition, in a block lenders accept, worth £300,000 through an estate agent. The table compares a sale at full value through an agent with a cash buying company's offer at 80 percent, towards the middle of the range, on what you actually receive.
Net proceeds on a £300,000 flat
Holding costs assume £150 a month service charge, £150 council tax and £500 mortgage interest.
| Item | Estate agency sale | Cash buying company at 80 percent |
|---|---|---|
| Sale price | £300,000 | £240,000 |
| Agent commission, 1.5 percent plus VAT | £5,400 | £0 |
| Solicitor, leasehold supplement and management pack | £2,200 | £2,200 |
| Holding costs while you wait | £4,800 over 6 months | £1,200 over 6 weeks |
| Time from decision to completion | 6 to 9 months | 3 to 6 weeks |
| What you keep | £287,600 | £236,600 |
The gap is £51,000, and for this flat that is the honest answer: an owner who has no deadline and can carry the costs is better off with an agent, even allowing for the risk of a fall-through. The discount buys time and certainty, and this seller does not need either.
The picture changes when the starting point does. If the same flat had 65 years on the lease, its market value through an agent would already be an investor's price, perhaps £240,000, and the buyers would be the same cash buyers and investors, taking the same months and carrying the same fall-through risk. A company's offer at 80 percent of that is £192,000. The gap is still real, but the agency route no longer offers a mortgage buyer paying full value: it offers the same sort of buyer, more slowly, with a fee on top. That is why the route makes most sense for flats with a problem and least sense for flats without one.
When the Discount Is More Than 30 Percent
Some flats sit below 70 percent, and it is worth knowing which so that a low offer does not come as a shock. A lease under 60 years, where the extension premium is a large slice of the value and lenders are gone entirely. A block with cladding or fire safety work where the cost to leaseholders is not yet known and no Deed of Certificate protection applies. Structural movement or subsidence where nobody has yet agreed who is responsible. A defective lease that cannot be mortgaged until it is varied, with a freeholder who will not engage. A flat above a commercial unit with a short lease and a difficult landlord.
In each case the buyer is pricing not just a known cost but an unknown one, and unknown costs are priced pessimistically. The offer should still come with reasons. A buyer who says "the lease has 55 years, an extension will cost around £45,000 and we have allowed for that plus the time it takes" is giving you something you can check. A buyer who says "it's a difficult one" and names a figure is not.
Where the discount is driven by one fixable problem, it is worth asking whether fixing it first would net you more. Serving a lease extension notice so the buyer can take over the claim, obtaining the fire risk appraisal the lenders want, or getting a structural engineer's report that puts a number on a crack can each move a flat from the bottom of the range to the middle. Our guides to cladding, structural problems and defective leases go through each.
How to Tell Whether an Offer Is Fair
Four steps, none of which takes long. Fix the market value first, from sold prices for comparable flats in their actual state, not from an asking price or the most flattering valuation. Work out 70 and 85 percent of it, which gives you the range a genuine company should land in. Place your flat within the range using the five factors above: long lease, good block and good condition near the top; short lease, restricted block or heavy works near the bottom. Then compare the written offer, after the buyer's visit, with that position.
An offer inside the range, with reasons that match the flat, is fair. An offer below the range needs a specific explanation, and if the explanation is a problem you did not know about, check it with your own solicitor or surveyor before accepting it. An offer above the range is the one to treat with most care: either the buyer has misjudged the flat, in which case the price will fall when the legal work catches up, or it is a high opening number designed to take the flat off the market.
Get two written offers if you can. The spread between two genuine companies on the same flat is usually small, a few percentage points, because they face the same costs. A large spread means one of them is wrong, and the one that is wrong is more often the higher.
Can You Negotiate a Cash Buying Company's Offer?
A little, and the way to do it is with information rather than pressure. A company's offer carries a contingency for what it does not know. Remove the unknowns and some of the contingency can come off. A management pack already in hand, a recent service charge statement showing no works planned, the building's fire risk appraisal, evidence of the lease term from the title register, or a structural report that puts a figure on a known issue all reduce the buyer's risk, and a reasonable buyer will reflect that.
Flexibility helps too. A completion date that suits the buyer's funding, or a willingness to leave furniture and contents that the buyer would otherwise clear, are worth something. What does not work is quoting a higher figure from a company that has not yet visited, or an estate agent's valuation given to win an instruction. A genuine buyer has priced the flat already and will not match a number it does not believe.
Know where the floor is. A buyer who moves from 78 to 81 percent for a flat with its paperwork in order is behaving normally. A buyer who jumps from 75 to 90 percent because you pushed was never going to complete at 90, and you have just been shown how the price will move again, downwards, nearer exchange.
Routes That May Net You More
If the worked example applies to you, a flat with no serious problem and a seller with time, the estate agency route nets more, whether the agent finds you a mortgage buyer or an individual cash buyer, and the company route is the wrong tool. Two others sit in between.
Auction
A traditional unconditional auction typically achieves 10 to 20 percent below an estate agency price, so a little above the company range, with a binding sale on the day and completion within 28 days. It costs an entry fee, commission of 2 to 3 percent plus VAT and a legal pack, and the price depends on who turns up. For a flat with a problem investors understand, a short lease or a restricted block, it is a serious alternative. Our auction guide has the detail.
Fixing the problem first
Where the discount is driven by one thing, the maths of fixing it can be good. A flat at 82 years can be extended for a modest premium and sold at full value through an agent, which usually beats a company's offer that prices in the extension at post-80-year cost. Our guide to extending before selling works through when that pays. Fixes that take a year and cost money you do not have are a different matter, and for those the company's discount is often cheaper than the wait.
The honest way to decide is to put the figures side by side as the worked example does: realistic agency price less fees and holding costs, allowing for the chance of a fall-through, against the written company offer less your solicitor. Most sellers find the decision is clear once both numbers are in front of them. Our options hub compares the routes in more depth.
Related Reading
For the wider cash buyer questions, see the Top 10. For the full cost of selling by each route, see the cost guide. For how the three routes compare, see the options hub.
Further FAQs
Not until it is in writing after a visit, and not if it comes with strings. A figure quoted on the phone before anyone has seen the flat is an estimate at best and bait at worst, and the companies most likely to lead with a high number are the ones most likely to cut it near exchange. Compare written offers, ask each buyer what the figure is based on, and check whether either wants you to sign an option or exclusivity agreement. A slightly lower offer from a buyer that will complete at that price beats a higher one that will not.
Our cash buyer Top 10 covers how to check a company before you rely on its number.
Either because the legal work found something genuine that was not known at the outset, or because the buyer always intended it to. A short lease nobody mentioned, a section 20 bill in the management pack, a defect in the title or a structural problem in the survey are all legitimate reasons for a buyer to revise, and a genuine buyer will explain the reason and show you the evidence. A cut with a vague reason, timed for when you have nowhere else to go, is price chipping. The protection is to disclose everything early, get the offer in writing and avoid anything that stops you walking away.
A genuine cash buying company charges no fees, so the only costs on top are your own solicitor and the management pack, which you would pay on any sale. The way to compare routes is on the net figure: the price you receive, less everything you pay to get it, less what the flat costs you while you wait. On that basis the gap between a company sale and an estate agency sale is smaller than the headline discount, though for a flat with no problems it is still a real sum, as the worked example on this page shows.
If the flat is not your main home, yes, because the gain is worked out on the price you actually receive. A flat bought for £200,000 and sold to a cash buying company for £240,000 produces a £40,000 gain before costs and allowances; sold through an agent for £300,000 it produces £100,000. At 24 percent that is a difference of over £14,000 in tax, which narrows the gap between the routes for a landlord or an executor. It never closes it, since you still lose more in price than you save in tax. Our guide to capital gains tax when selling a flat has the full rules.
The buyer, as in every sale. A company buying an additional dwelling pays stamp duty land tax at the standard rates plus the 5 percent surcharge, and a company paying over £500,000 for a single dwelling can face the flat 17 percent rate. That cost is one of the things built into the discount, along with the buyer's legal fees, holding costs and resale risk. The seller pays no stamp duty at all.
Sometimes a little, rarely a lot. Flexibility on the completion date helps a buyer plan and may be worth a small improvement, and a flat that comes with the management pack already in hand saves the buyer time and risk. The discount itself reflects the buyer's costs and the resale risk rather than how urgent you are, so waiting does not change it much. If you can wait months rather than weeks, the better question is whether a different route would leave you with more, and the section on routes that may net you more sets those out.