Despite recent years of relative instability, the housing market in this country has helped a lot of people make a lot of money. Ordinary people have consistently been able to invest in an asset that they can also live in, and then sell it a few years down the line while still making a nice little profit.
However, is that still possible to achieve when selling a house for cash, or is it only feasible when selling using more traditional routes? Let’s take a quick look at whether you can still make money selling a house for cash or not.
Selling a house for cash
When selling a house for cash, there are a range of both benefits and drawbacks. The benefits are usually connected with the speed of the sale, with the process being up to around 10 times faster than ‘traditional’ sales.
The drawback is that you won’t generally get the full market value for your property. Typically, cash buyers will offer somewhere between about 80-90% of what you could get from going the traditional route, which does make it more difficult to sell at a profit compared to the price you bought the house for.
Doing the maths
To determine whether you can still make money selling the house from cash, you need to compare the price you bought the property at with the current full market value. If the difference between those two figures is more than around 25%, then there’s a good chance you can still make money.
That being said, even if it isn’t, certain properties will be easier to sell for cash at a higher percentage of market value. You’ll need to speak with an estate agent or other expert, to see whether or not you will be able to command a high price.
When it’s worth it
In some cases, it can still absolutely be worth selling below market value, otherwise cash buyers wouldn’t be able to command such a discount.
This will typically apply to situations where the seller needs to liquidate their assets quickly, to avoid expensive fees, free up their cash for other investments, or any number of other reasons.
In these situations – and in cases where the house has been inherited, not bought – your ability to make money from the sale isn’t directly related to the price you would have paid for the house. There can be many more factors at play, and they all deserve your consideration.
When it’s not worth it
If you’re not in a rush to sell your house, then it’s generally worth selling it using a more traditional method. By waiting just 5 or so more months, you can potentially get a lot more for your property, and barring other time constraints, this will normally be the way to go.
It’s important to get advice on all of these matters before making a decision. They can have a big impact on your future, and it’s worth having an overview of all relevant factors.
A shout out to the team at Property Sale Watchdog, for their pointers and words of advice for this article.
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