Should I sell my property to a cash buyer?
by Rizwan Osman on 6th April 2021
Moving house is one of the most stressful things you can do. If you speak to those who have moved recently, they will probably tell you that it is not the move itself that causes the most stress but the uncertainty and risk that the purchase could fall through. Some believe that the best way to avoid this stress is to sell to a cash buyer.
This article looks at the advantages and disadvantages of selling to a cash buyer and whether there is another way to avoid the stress involved with moving house.
What is a cash buyer?
A cash buyer is someone who can purchase a property outright with money they have at their disposal. To be considered a cash buyer, they must have the funds available when placing the offer. A buyer who needs to sell another property to buy your home is not considered a cash buyer.
What types of vendors seek a cash buyer?
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. This is a considered and meticulous process that 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.
Advantages of selling to a cash buyer
- There is no complicated chain – selling to a cash buyer does away with the dreaded property chain, which means there is less chance of the sale falling through because of a third party.
- There is no risk of mortgage issues – a large proportion of sales fall through because the buyer is unable to secure a mortgage. A cash buyer will not need to secure a mortgage, so the sale is more certain.
- The process is faster – removing a mortgage lender from the transaction dramatically cuts down the time it takes to complete a sale.
Disadvantages of selling to a cash buyer
- Cash offers are often less – Cash buyers know that sellers perceive benefits from selling to them. This gives them the power to demand a discount on the asking price.
- Cash sales can still fall through – There is always the possibility that your cash buyer will have a change of heart and pull out on the deal.
- Scams can happen – From hidden fees to last-minute price reductions, scams are an unpleasant part of the cash buyer market. The easiest way to steer clear of scammers is to work with a reputable estate agent.
What is the process for selling a home to a cash buyer?
The process for selling a house to a cash-buyer is very similar to any property sale except that your buyer does not need to arrange a mortgage.
Ask for proof they have the funds in the bank
Once you receive an offer from a buyer who claims to have the cash to buy your property, ask your estate agent to obtain proof of the buyer’s financial status. A true cash buyer will not have to sell their 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.
Their solicitor will carry out property searches
The searches typically carried out by the mortgage lender will still need to happen. For a cash buyer, these will be undertaken by their conveyancing solicitor and include a Local Area Search, Regulated Drainage and Water Search and Land Registry Title Plan. You will need to allow time for these to be carried out.
They will probably still opt to have a survey
Although your cash buyer will not require a mortgage valuation survey, you should still expect them to pay for a home survey to flag up any potential issues with your property. If problems are flagged up, you may find that your cash buyer tries to reduce the purchase price or decides not to go ahead with the sale.
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.
Is there another way to avoid the stress of selling a house?
Yes. Take expert advice and use a reputable estate agent with local experience.
Before you venture into the arms of a ‘we buy any house’ 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.
Here at Credential we have been working in the Tooting property market for over 25 years. We can negotiate with a cash buyer on your behalf to secure the best deal possible. Even without a cash buyer, our experienced team will strive to ensure you are provided with the service you need to take the stress away. Contact us today.