How do these "we buy any house" companies work? Specifically "SmoothSale"?

gelato_cat

We went to view a house on 4th August, which we decided not to buy.

Then on 11th August, we noticed it was no longer listed with Haart, and is now on Rightmove with SmoothSale (https://www.smoothsale.co.uk/).

We still don't want to buy the house, but are curious as to how it would work (in case we see another like this).

Have SmoothSale already bought the house from the vendor?  So then would any buyer be buying from SmoothSale?

[Edited to add: the person who showed us around was the owner-occupier.  She and her family still live there.  So are they renting the house from SmoothSale?  How does it work?]

We are super curious / confused about the process because the house is in a really bad state (Haart did a very good job with the photos), yet SmoothSale has it listed at a similar price to Haart's old listing, which makes me wonder how much they've paid the vendors for it.

When we met the vendor, they seemed to be holding out for half a million pounds (which is the same as others in the street which have been newly renovated) so we can't imagine they accepted an extremely low offer from SmoothSale.

MorningcoffeeIV

They buy the property from the vendor for a very low amount, the sell it on at speed.

It's all about margin and fast turnover.

fatbelly

As above. We once bought from one of these companies. Bear in mind that they won't be able to answer technical questions about the house, and have plenty of room for negotiation on the price

gelato_cat

So they have already bought it from the owner?

The person who showed us around was the owner.  They're still living there.  I forgot to mention that part, which is crucial because that's the part that's confused us the most.

Does the (ex-)owner rent it from the company then?

[I'll edit my original post accordingly.]

Martico

I suspect they might try to arrange a discounted price with the current owner, then quickly find a buyer and line up the transactions to flip the place immediately, pocketing any differential without shelling out in the first place.

gelato_cat

That sounds a bit complicated... might as well just go with a traditional agent in that case?

Mstty

This is how it works,

They get your house cheap and sell it for a quick profit just parting on the fear some people have of selling. (With some exceptions such as need the money quick life and limb scenarios but it's still sold cheaply)

gelato_cat

Mstty said:

This is how it works,

They get your house cheap and sell it for a quick profit just parting on the fear some people have of selling. (With some exceptions such as need the money quick life and limb scenarios but it's still sold cheaply)

Right - but if they've got their house cheap, how come the vendors are still living there?

Grizebeck

Suzey said:

Mstty said:

This is how it works,

They get your house cheap and sell it for a quick profit just parting on the fear some people have of selling. (With some exceptions such as need the money quick life and limb scenarios but it's still sold cheaply)

Right - but if they've got their house cheap, how come the vendors are still living there?

they could be on an AST

Martico

Suzey said:

Mstty said:

This is how it works,

They get your house cheap and sell it for a quick profit just parting on the fear some people have of selling. (With some exceptions such as need the money quick life and limb scenarios but it's still sold cheaply)

Right - but if they've got their house cheap, how come the vendors are still living there?

My suspicion (I haven't looked into it deeply) is that they don't actually purchase until they've got an onward sale lined up and guaranteed to go immediately. I don't think such companies, especially startups with a desire to scale, would have deep enough pockets to do otherwise. 

Martico

House is valued at 200k - webuy company gets an offer of 175k accepted - webuy company finds a buyer willing to pay 180k - webuy company lines up the deals and pockets 5k without paying out a penny*

*All the above is made-up guesswork