‘Cash buyer only’ is a phrase that house hunters will either love or dread. But what does cash buyer only mean? Find out what it is, and what it means for your prospects of securing the property you’ve set your sights on. Our simple guide explains how the funding of a property offer affects its attractiveness.
FAQs
What does a cash buyer mean?
In property terms, a ‘cash buyer’ is a buyer who can fund the full amount of their offer themselves. I.e.: they have all the required money available immediately. They don’t need a mortgage or any other type of financing to complete the sale.
What does a ‘cash buyer only’ mean?
If you see a property listed as ‘cash buyer only’, that means the seller is only interested in cash buyers. I.e.: they will not accept any offers from buyers who need to secure a mortgage to fund their offer.
Does cash buyer mean actual cash?
Being a ‘cash buyer’ in property terms does not mean that you need to complete the purchase using actual cash. All it means is that you, the buyer, have enough money in your bank account(s) or other provable liquid assets (e.g.: premium bonds, sellable ISAs, etc) to make your offer.
Why would a seller want cash buyers only?
Property sellers often prefer selling to cash buyers because it’s generally quicker and more reliable. Neither side needs to wait for a mortgage to be approved, or for other sources of money to materialise. The funds are right there, ready to go.
Is it better to be a cash buyer in property?
If you’re looking to purchase property, it is better to be a cash buyer for two reasons. The first is that you don’t have to secure a mortgage – which comes with interest payments and the potential for refusal.
The second reason is that as a cash buyer you have extra leverage when negotiating the sale price. Property owners know the benefits of dealing with a cash buyer, so they may be willing to drop the price accordingly.
How do you prove that you are a cash buyer?
You generally prove that you are a cash buyer by providing the seller’s solicitor with a bank statement showing that you have immediate access to the amount you have offered. This is called ‘proof of funds’.
If you have other liquid assets (premium bonds, etc) that you don’t want to sell before the offer is agreed, you can show these too.
How much less should you offer on a house when paying cash?
You can leverage your cash buyer status to make a lower offer; this is a valid and often successful negotiating strategy. The size of the reduction depends on the circumstances. How motivated are the sellers to sell? How valuable is their property and is it likely to attract other cash buyers quickly?
Generally speaking, it’s not uncommon for cash buyers to offer 10-15% less than a buyer who needs a mortgage. However, this is an extremely broad average.
What are the disadvantages of cash buyers?
For the seller, the disadvantage of selling to a cash buyer is that you will probably secure a lower price overall. If you are motivated to sell, and only want cash buyers, expect them to offer less.
The disadvantage of being a cash buyer is that you are committing a lot of your own capital to the property. Rather than borrowing from a mortgage lender, you are supplying a deposit of 100% of the value of the property. Depending on your situation, this may leave you with less financial flexibility in the future.
Do cash offers ever fall through?
Cash offers can fall through, and they frequently do. While the buyer doesn’t have to worry about being refused a mortgage, there are plenty of other difficulties that might crop up. Unexpected financial troubles can mean that the buyer must pull out of the purchase, as they can no longer commit the earmarked funds.
Do you need a solicitor as a cash buyer?
Although buying a property with cash is a more straightforward affair, you’ll still need a solicitor to handle the conveyancing on the purchase. Property transactions are a complex legal process, and while you can handle it yourself, it’s usually much easier to employ the services of a solicitor.
How do you beat a cash offer?
Cash offers are attractive, but home buyers who need a mortgage can still beat them. There are a number of things you can do to make your offer more attractive than a cash buyer:
- Get your mortgage pre-approved. This shows the seller that you will be able to move ahead with the purchase with an established lender.
- Personalise your offer. Write to the owner explaining why you love the property and why it is the perfect fit for you, your family, etc. This can be surprisingly effective, as homeowners are often emotionally attached to their homes, and like the idea of it going to a new owner who cares.
- Offer more money. If possible, you can always offer at, or even above, the asking price. Since cash buyer offers are generally lower than the asking price, this will give the owner something to consider. Do they want to make a quick sale? Or can they afford to wait a little longer to sell to you, and secure a higher sale price?
Do you need to conduct searches as a cash buyer?
Property searches are usually carried out by your conveyancing solicitor. Mortgage lenders often require evidence of property searches before they approve their lending, to ensure the property isn’t likely to prove financially problematic in the future. As such, there’s no obligation to conduct searches if you’re a cash buyer, but you might consider still paying for them for your own peace of mind.
Does a cash buyer mean there’s no chain?
Although cash buyers and property chains aren’t fundamentally connected, you’ll often find a cash offer for a property comes with the benefit of no onward chain. This tends to be because the buyer doesn’t need to sell a property to fund their property purchase. Cash buyers may also have already sold their previous property, providing them with the funds to make a cash offer on a new home.
Is it quicker to sell to a cash buyer?
Selling a property to a cash buyer can be quicker than selling to a buyer who needs to secure a mortgage. This can take time, although many buyers make sure they have a mortgage offer before they start their house hunt.
The conveyancing on a cash-buyer property transaction can be completed quicker, as they may decide not to conduct all the searches usually associated with a mortgage. Finally, cash transactions can be quicker because it’s more likely there will be no onward chain when you’re selling to a cash buyer.
If you’re thinking of making a cash offer, or want to beat one, we hope this guide has been helpful. Check out our other guides on all elements of the property buying/selling process. We can help you decide how best to make an offer, finance that offer, and plan your next steps if successful.
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