What Does Cash Buyer Only Mean?
Estimated reading time 6 minutes
We have all seen the adverts in estate agent windows and online, where the seller lists their property as available for purchase to cash buyers only. But what does this mean and why are they potentially limiting their buyer’s market?
In its simplest definition, “cash buyer only” means that the seller will only accept offers from the buyers that can pay for the property outright, right away. No mortgage, no loans, and no waiting for funds to clear.
Cash buyer isn’t quite the term you may think it is though. You can’t waltz up to the seller with a stash of cash and pay for the house. The UK Anti-Money Laundering regulations mean that the funds must be checked by the conveyancer to see that they come from a legal source. As a result, the funds are transferred electronically. In this blog, we look at the term in a little more depth.
What is a cash buyer?
A cash buyer is someone who can finance the purchase of a property without having to rely on a mortgage, loans, or an inheritance to make the purchase possible. The funds must be available when the offer is made and not from when you complete the sale of your own property. Unless of course, you have already sold your property and received the funds in advance of you making an offer on the new property.
Selling to a cash house buyer can have its benefits, the transaction is much more likely to go through, and the speed of the transaction is significantly faster, but there are also some disadvantages.
The advantages of selling to cash buyers only
Buying a property with cash can be much more appealing to sellers. With funds readily available a buyer can avoid the costly fees and interest from mortgage lenders as well as the wait moving from a mortgage in principle to an actual mortgage offer. This alone makes the sale to a cash buyer extremely appealing.
Furthermore, with no need for a chain, there is less likelihood of the sale collapsing.
Cash buyers also allow themselves to be in a prime position to move more quickly in the property market. Snapping up a house at auction for example or obtaining the properties that have struggled to sell on the traditional market in the past makes for a fast house sale process where both sides ultimately achieve their property goals.
For the seller, a cash house buyer provides a quick and easy route to sale, especially helpful when there may be financial worries, a job relocation, or issues with the property that cost lots to fix and may be out of reach to the current homeowner.
For both the buyer and seller it offers a no chain, no stress, quick process that is less likely to break down like the sales on the traditional market are prone to.
The disadvantages of selling to cash buyers only
If you decide to list your property as available to cash buyers only, you reduce your pool of potential buyers significantly. There are not a vast number of people with enough cash in their bank to buy a house outright other than cash house buyer companies like Gaffsy, for example.
The speed, whilst also great, can be a stumbling block to some. Individual cash buyers aren’t all looking for their next property investment, some are looking to purchase a new family home, and the speed of the process may be unsettling and put them under pressure to purchase.
Perhaps the largest disadvantage is that by reducing your pool of buyers, you lower the chances of receiving an offer close to your asking price. A cash buyer knows they hold a very powerful bargaining chip in having funds ready to hand over and it can be alluring to those selling.
We recently covered a selection of the pros and cons of cash house buyers (insert link when live), showing how they could benefit some people but perhaps not others.
What is the difference between cash buyer only and mortgage buyers?
The only difference is the funding of the property purchase. The mortgage is a loan that accrues interest over time whereas the cash buyer has funds readily available. This means that those looking to sell to a cash buyer only, tend to have their sale agreed much quicker than those selling via the more traditional means.
That being said, the pool of cash buyers is considerably smaller than those able to get a mortgage, so it can often mean even though a sale is faster, finding someone to buy the property can be harder.
Why are some properties cash buyers only?
The reasons for a home being listed as for sale to cash buyers only can vary. The owners may want a quick sale due to there being a change in their working environment. A sudden relocation can mean a quick move is needed, but there are many other common reasons someone opts to list a home for cash buyers only. They include:
- Potential repossession or other financial issues
- Structural issues such as subsidence, fire damage or flooding, that may make a mortgage hard for other buyers.
- The property is a leasehold and only has a short lease remaining, making a mortgage impossible.
- They might need to make an immediate property purchase
- Previous buyers may have backed out
- A property has been inherited
If you are looking to purchase a property advertised as cash buyers only, it would be beneficial to know why the sellers are using this route for sale and to have a survey booked. That will help you uncover any costs you could be accruing further on.
Do sellers prefer cash buyers only?
Occasionally yes. The quicker path to selling the property is attractive and knowing that the funds are there can be a huge incentive but with a smaller pool of people to attract, it can see lower offers being made and eventually accepted.
Selling to a cash buyer can be an easy way to get the sale completed but unless it’s from a trusted buyer, there could be difficulties. That is why trusted and authentic cash house buyers like Gaffsy operate the way they do. With guaranteed funds and a reputation of being honest, efficient cash buyers, we buy any property and it doesn’t even have to be listed for sale to cash buyers only. Regardless of condition, type, or location, we can make you a genuine cash offer.
We start by valuing your home and then making an offer on it. Should that offer be accepted, we then move fast to ensure the sale is completed. This can be done in as little as seven days, or longer if you require. Speak to our property experts today to discover how easy selling your house can be.