What steps you should take when selling to a cash buyer
by Rizwan Osman on 1st April 2019
The process of selling property to a cash buyer is usually quicker than selling to a buyer who needs to secure a mortgage before they can purchase a property. With 42% of sales to London landlords now independently financed and requiring no mortgage, here’s how the process works.
Which vendors seek cash buyers
1. Vendors who need to sell fast
Mortgage lenders must satisfy themselves both that a property is sound, and that the borrower will be able to meet their repayment commitments before they agree to lend money. A considered and meticulous process, it often slows down the sale of a property. By contrast, a cash buyer already has the money to buy. With no mortgage agreement required, sales usually go through much more quickly.
2. Vendors bruised by potential buyers whose mortgage deals fell through
Legally, mortgage lenders cannot offer mortgages to borrowers who they regard as likely to default on their repayments. When such a potential buyer is turned down, vendors are faced with having to put their property back on the market. Disappointed and desperate to sell, many will seek a cash buyer.
3. Vendors whose property is in poor condition
With mortgage companies unlikely to offer a loan on an unsound property, cash buyers may be the vendor’s only option.
What to look out for if you receive an offer from a cash buyer
Once you receive an offer from a buyer who claims to have the cash to buy your property, protect yourself. Before you accept the offer, ask the estate agent to obtain proof of the buyer’s financial status. A true cash buyer may well commission a survey, but it won’t be in order to secure a mortgage. Nor will a cash buyer have to sell their own property before accessing the funds to buy yours.
If the potential buyer cannot provide proof that they’ve got the funds in the bank, they’re not a cash buyer. Either accept their offer in the full knowledge of what it is or wait for another offer.
Watch out for ’cash-buyer’ companies
Put the term ‘cash-buyer’ into a search engine, and you’ll be flooded with adverts from companies offering to buy your property for cash. While they may get you a quick sale, they are also likely to demand a large discount for that sale. Among the range of dangers, you may face should you be tempted to try one of these companies, you may end up as much as 25% out of pocket.
Before you venture into the arms of such a company, consult your local estate agent and discuss the matter with them. You may well find that they can help you get your quick sale, or even find better ways of solving your present dilemma. Maybe you could rent out your house in order to be ready for the school term 100 miles away? Perhaps they can suggest a better way to fund long-term care?
They might even advise you about renegotiating the terms of your mortgage if you’re failing to keep up with your repayments.