House Buying Companies vs. Property Auctions

Transcript

Hi, I’m Ruban Selvanayagam from Property Solvers…

If you’re exploring how you can get a quicker sale of your property, two routes usually come up: house buying companies – often referred to as “sell house fast” or “we buy any home” firms – and property auctions.

At first glance, they can look reasonably similar. Both offer speed, reduce chain risk and appeal when time, certainty or complexity is a factor.

But structurally, they operate very differently…

In this video, I’m going to break down how each model actually works, where the risks sit and how to decide which route makes sense for your specific situation.

Let’s dive in…

A house buying company typically acts as a direct purchaser. The property is assessed, an offer is made and, if agreed, the transaction proceeds privately to exchange and completion within short timeframes – in some cases, such as here at Property Solvers, in as little as 7 days.

There’s no public marketing campaign or open competition and, assuming you’re dealing with a credible operator, no ongoing negotiation once terms are agreed. It’s a single counterparty transaction.

The primary advantage here is simplicity.

You’re dealing with one buyer. Timelines are typically short – often a matter of weeks – with exchange of contracts taking place even sooner if required.

In most cases, legal (or conveyancing) fees are covered and, because it’s a private, direct sale, you avoid estate agency or middleman fees.

What’s more, there are no open viewings, chains or dependency on mortgage approvals to get the sale over the line.

That type of arrangement can make sense when speed and minimal moving parts are the priority.

But this comes with a trade-off: the purchase price will typically be around 70 to 75% of the market value.  

It’s not a solution that works for everyone – and as a home buying company ourselves we recognise that. For many, maximising price is the key objective.

There’s also a perception that these types of offers are taking advantage of the sellers that use services like Property Solvers. The reality is that companies like Property Solvers are operating as investors, taking on costs, shorter timelines and risk as part of the transaction.

I go into this in more detail in a separate video on below market value offers, which I’ll link to in the description. 

But in short, the costs add up quickly.

Stamp Duty – including the additional property surcharge – legal fees, ever rising refurbishment and holding costs alongside a range of operational overheads all need to be factored in. On top of that, the buyer takes on resale and refinance risk, including the possibility that the exit takes longer or the market shifts.

Because of that, pricing reflects the cost base and the level of risk being absorbed.

Now contrast that with an auction sale, which introduces a broader pool of active and experienced buyers into the equation.

Instead of negotiating with one buyer, you’re presenting the property to multiple bidders within a defined timeframe.

With a traditional auction, exchange of contracts happens immediately at the fall of the hammer, a 10% deposit is paid on the day and completion is fixed – typically within 28 days. 

That structure significantly reduces fall-through risk.

Where demand is strong, auction can create competitive bidding and often achieve results in the region of 85% to 90% of open market value – although this can vary depending on property condition, location, pricing strategy and overall buyer appetite.

But auction isn’t without its considerations. There are sales fees potentially alongside marketing and entry costs, a legal pack needs to be prepared and the reserve must be set carefully. 

And while exchange is binding if the reserve is met, there is still the possibility that bidding falls short of expectations.

It’s also a far more public process compared to a private direct sale with a homebuying company so doesn’t suit people who don’t want people to know about the transaction.

And if bidding doesn’t meet the reserve, the property may need to be withdrawn, re-offered or repositioned.

So which route is better?

The honest answer is: it depends entirely on the objective.

On one side, you have a direct buyer – a private, off-market transaction with a single counterparty, simple structure and very fast timelines. In some cases, completion can take place within days. Once agreed, the outcome is highly predictable – but that comes with a trade-off on price.

On the other side, you have auction. A public process that introduces multiple bidders, creates price discovery and works to a fixed timetable. If demand is there, you may achieve a stronger result. But that outcome is dependent on bidder appetite, and it isn’t guaranteed.

So it really comes down to what you’re trying to prioritise.

If the primary goal is simplicity, discretion and a predictable outcome – perhaps due to financial pressure, probate, relocation, tenant issues or structural complications – a direct buyer can provide a clean solution quickly.

If the objective is to introduce competition while still working to a defined timetable and contractual commitment, auction may be the stronger route.

And then there’s a third option that often sits between the two.

At Property Solvers, we also operate an investor introduction service. For sellers who want discretion – perhaps landlords exiting quietly, probate cases or other sensitive situations not suited to the open market – we can introduce vetted investors privately.

This combines elements of both approaches: structured, time-bound and targeted, but without the full public exposure of auction – and often achieving a stronger price than a direct cash offer, as these buyers don’t carry the same operational overhead.

So the key takeaway is this…

In many cases, it doesn’t actually come down to choosing between these routes at all.

A large proportion of sellers we speak to simply need to make a few adjustments – often around pricing, positioning or presentation – and the property sells through the open market without needing to go down any of the options discussed in this video.

That’s probably the most overlooked point.

Before considering auctions or sell house fast companies, it’s worth asking whether the current strategy is aligned with how the market is behaving today.

Because more often than not, it’s not the method that’s the issue – it’s the price and positioning.

But when time is constrained, or the property comes with complexity, that’s where these structured routes come into their own.

So whether it’s a direct sale, auction, or a more discreet investor introduction, the right answer depends on what you’re trying to achieve – and how quickly you need to achieve it.

If this is something you’re currently working through, I’ve freed up time each week for a limited number of free, no-obligation consultations where we can look at your situation and talk through the most appropriate approach. You’ll find the details in the description below.

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A big thanks for watching.