Is it true that cash buyers are the best type of purchasers for your property?
Should you hold out to get an offer from a cash buyer? Are they really the best option? Would you go to great lengths to ensure you could buy your next home with cash? Read this article to find out if cash is king in property sales.
It is often thought that an offer from a purchaser who can buy with cash, without the need for mortgage finance, is the very best option for a homeowner. So much so that cash buyers often offer a lower price because they know their circumstances are desirable. Of course, wouldn't we all like to tell people we have enough money to buy a property without lending or financing? But, if you are trying to sell your home, how much weight should you put on a cash buyer? Should you turn down other offers to pursue a cash buyer for your property? Would you accept less money for your house from a buyer in this position? Or is there any merit in taking longer to sell your property as you hold out for a cash buyer?
In truth, and in most markets, a homeowner will usually negotiate with any buyer, in any circumstances, provided they have the funds available and pay the right price, even if these funds are coming from mortgage lenders. Not many sellers would refuse a perfectly good offer just because they need a mortgage. The key question is whether they can obtain the funds to buy your property.
According to the 2021 Census, a new high of 33% of homes in the UK are now owned outright, with no mortgage borrowing against them. This dramatic increase shows that homeownership and paying off mortgage funding are clearly very important to homeowners in the UK.
But, if one of these mortgage-free people wants to buy your house from you, they will most likely still have to sell this property to realise the funds tied up within the asset. This would mean that a sale to this person would involve a chain of other buyers/sellers below them. Whilst there is no mortgage funding related to purchasing your property, it is doubtful that the entire chain would be moving without any mortgage financing.
And so, whilst selling your home to a cash buyer will give you peace of mind that the buyer has the money available to pay for your house-there is no issue with a mortgage offer being revoked or a sudden hike in the interest rates to affect the buyers' ability to buy-there are not so many of these elusive cash buyers around. And unless they have the cash readily available in the bank, they will have a related sale anyway.
Even if there is cash available, without the sale of a property, which is quite unusual, there could be a notice period to release the money, meaning that they will not be able to complete much faster than a sale with a mortgage. Or, of course, they could spend the cash before the sale is completed.
A cash buyer could come in very handy if the property in question has any complexities. This could be something in the deeds, a right-of-way issue or planning permission. Or perhaps the property is in poor condition, meaning a mortgage lender would not be willing to loan against the property. Cash buyers can make that decision without being beholden to the lenders' requirements. Often, properties with complications sell at auctions, and most often to cash buyers willing to take on potential risks in return for a chance to grab a bargain.
So, unless you have a highly complex property that a mortgage lender would be reluctant to lend on, a cash buyer is likely no better to sell your property to than a mortgaged buyer, so you probably shouldn't hold out for this kind of buyer at the detriment of your property sale process.
Providing that the circumstances of your buyers are thoroughly checked, however they intend to purchase the property, you should be able to proceed without too much concern.
Your estate agent should do thorough checks on the purchasing position of your buyer, regardless of how they intend to pay, to give you this peace of mind.
If you have any questions about this or any other aspect of selling a property, contact our team of property experts today.