When you're house hunting or planning to sell, and you come across a property ad that says, "cash buyers only," what does that mean? Here we'll answer your questions on cash buying.
What does cash buyers only mean?
Often, when we say, “cash buyer only,” it’s because a buyer requires an especially quick sale. They’re asking only for offers where all the money is available immediately – no waiting on inheritance, or the sale of a house, or a mortgage application.
There are many reasons a seller might prefer a cash buyer. There could be an issue with the property that would make getting a mortgage difficult. In this case, they’re often looking for a professional investor that would be willing to put work in to majorly fix up the property. But that’s not the only reason. They might be trying to purchase at the same time and need money quickly, they might have had an issue with a buyer backing out before, they could be leasehold with a short lease remaining that would make a mortgage impossible, or they could be relocating. It is important to know why the vendor is looking for a cash buyer and, while it’s not a requirement, we suggest you have a surveyor review the property.
So if you’re hoping to buy one of these properties, you’ll need to provide proof of funds – like a bank statement confirmed by your conveyancer.
Putting "cash buyers only" on a property ad is not the only way to get a quick sale – Foxtons Auctions are exceptional for completing sales quickly, and walk sellers through the process to make it easy as possible.
Cash buyers vs mortgage buyers
What is the difference between cash buyers vs mortgage buyers? How the buyer will pay for the property. There are pluses and minuses, as a seller, to requesting a cash buyer. The process of agreeing a sale with your buyer tends to be quicker, as there’s no mortgage offer to wait on, so there is less opportunity for the sale to fall through. However, if you request “cash only buyer” on your property ad, you will have a much smaller pool of buyers to choose from. Your asking price should also be lower if you’re looking to attract cash buyers.
How do you buy a house with cash?
To buy a house with cash, you will need to have the funds available when you put in your offer, and provide proof of funds available. Being a cash buyer doesn’t mean you have physical cash, it will need to be in a bank account to comply with anti-money laundering regulations. Cash gifts are an acceptable form of funds.
Benefits of being a cash only buyer
There are advantages to buying with cash if you can afford to, particularly speed and savings. House offers from cash buyers appeal to sellers because there isn’t such a risk the sale will fall through – it’s quicker and simpler. If they are asking for cash, they’re likely selling at a lower asking price to encourage this quick sale.
There is no onward chain, so no other property sales that must be completed to make this one successful. There’s no waiting period for a mortgage application. Down the road, you also won’t be paying interest on a loan, or worrying about fitting mortgage repayments into any lifestyle changes.
Disadvantages of being a cash buyer
There are some disadvantages as well. Liquidity stops most people from being cash buyers – buying a home with cash requires a substantial amount of money available. Not to mention, the speed of the sale can concern some buyers – you will need to ensure all checks are completed and you’re confident in the purchase – you’ll need a conveyancer and having a surveyor and an estate agent on your side can help you navigate the purchase.
Do sellers prefer cash buyers?
Not necessarily, most vendors do not specify “cash buyers only”, because it limits who will view their properties. It also means they’ll likely have to settle for a lower price. There are many things you can do to make your offer stand out as a mortgage buyer and a cash buyer, see our article Making an offer: how to negotiate when buying a home for more information.
