There are several different ways to sell your house.
Most people use the open market, i.e., using an estate agent.
However, this isn’t the best route for everyone.
For some, using a cash buyer is ideal.
But what exactly is a cash house buyer?
And does selling to a cash buyer mean no mortgage is involved?
Read on to find out.
Why cash buyers only & what exactly does it mean?
A cash buyer is an individual or company with all the money needed to buy a home immediately.
This ability to buy has no strings attached.
They have the funds available and accessible.
Cash buyers usually pay between 80% – 85% of a property’s value.
In exchange for this, they buy it fast with a straightforward process.
Genuine cash buyers vs. non-genuine cash buyers
Some buyers declare themselves cash-buyers incorrectly.
They might doing this on purpose or unknowingly. There are differences between cash buyers and buyers with mortgages. These affect sales in many ways.
Non-genuine cash buyer example 1: The individual
Someone who owns their home outright and is waiting for a sale might consider themselves a cash buyer.
However, they still need to wait for a sale. And that sale might yet fall through.
Non-genuine cash buyer example 1: The company
Some so-called property companies also misleadingly title themselves as cash buyers.
They might use deceptive tactics. For example, stalling the sale of a house whilst they search for the funds to buy it outright.
Is there a mortgage involved when selling to a cash buyer?
No, selling to a cash buyer means no mortgage is involved.
If a seller states that they want cash buyers only and you tell them you’re guaranteed to get a mortgage, they won’t care.
If you need a mortgage, they won’t consider your offer.
This can be frustrating if you think you’ve found your dream home, but what are the reasons for this?
Reasons for sellers turning down non-cash buyers
1. Mortgage concerns
There are many reasons, but we’ll start with the big red flag: the property may be unmortgageable.
This is usually because there is something fundamentally wrong with the property. So, the lender deems the mortgage too much of a risk.
If this is the issue, the seller should have already outlined it.
They don’t legally have to, as it’s your responsibility to get a survey, which is why it’s a potential red flag. They may be trying to sell a house that needs extensive repairs.
2. Risk of property defects
They could have found one of a number of issues, such as:
- Structural damage
- Signs of dampness
- Subsidence
- A pest infestation.
Of course, the seller may be open and honest about this, or the issue may be apparent.
For example, they may want to sell a home that floods or a fire has damaged. A lender may be hesitant to offer a mortgage on such a property, even if the sale price considers this damage.
3. Timing
The most common cause is that the seller wants to sell the property as soon as possible. They don’t want to wait for the mortgage process to complete.
Why would someone be so desperate for a quick sale? There are several potential reasons:
- They want to settle their divorce as soon as possible
- They face repossession
- They need the cash
- They inherited the property (and have already waited through a long probate process)
- Failed mortgage applications.
If you’re interested in the property, it could be a good idea to ask why they are listing it as cash buyers only.
You could negotiate and see if they’ll accept a higher offer for a mortgage applicant.
They may say no, but if you have your heart set on something, there’s no harm in asking.
Advantages of selling to a cash house buyer
Failure less likely
When you sell your house to a cash buyer, you often don’t have to worry about your sale falling through.
There is a low chance of problems that occur in traditional home-selling processes.
Less stressful
Selling your home can be stressful, but a cash house sale can reduce some of that stress.
Cash buyers typically require fewer inspections, appraisals, and paperwork. This makes the process less time-consuming and less of a hassle.
No chain
There is no chain involved when you sell to a cash buyer.
You don’t have to worry about your sale being held up by another transaction dependent on your sale.
Quick process
A cash sale can often be completed much quicker than a traditional home sale.
The process takes weeks rather than months.
The cash house buying process
1. Agreeing an offer
The first critical step of any cash-buying process is agreeing on an offer.
This offer is typically between 75% and 85% of a property’s value on the open market. It is not usually worth the buyer’s time to pay more than this.
Some sellers find this difficult to accept. After all, it equates to thousands or tens of thousands of pounds.
So, negotiation is a vital part of this stage.
2. Providing proof of funds
Some sellers will ask buyers to provide proof of funds (POF) early on. POF can reassure sellers that the cash buyer is legitimate.
Some non-cash buyers claim to be cash buyers and then stall sales until they find funds.
This benefits them but is highly detrimental to the seller. In this scenario, the latter would have been better off selling on the open market.
3. Finding a solicitor
Having legal representation when entering a house transaction is always a good idea.
This applies to both buyers and sellers.
Some cash buyers will cover the seller’s legal fees. Solo property developers don’t often don’t make this offer.
4. Complete searches
Important property searches include:
- The Local Authority Search
- Checking for planning restrictions and highway issues
- The Water and Drainage Search
- The Environmental Search.
Additionally, a Land Registry search confirms property boundaries and ownership.
Typically costing around £300, these searches are crucial for identifying potential issues.
There are optional searches (mining, chancel, bankruptcy, etc.)
5. Complete survey(/s)
A house survey is a detailed property inspection conducted by a qualified expert.
There are several different kinds of surveys. They variously examine properties’ condition, including:
- Structure
- Boundaries
- Potential defects (e.g., subsidence, dampness).
And more.
This information is crucial for buyers. It helps them to make informed decisions and negotiate the purchase price.
6. Organise paperwork
Cash buyers are still property transactions like any other. Sellers need to have the correct documentation in place.
Depending on the circumstances, they may still require:
- An Energy Performance Certificate (EPC)
- Title deeds
- Property Information Form
- An official exchange of contracts.
And more.
7. Completion
Completion is where legal ownership transfers from the seller to the buyer.
It’s the final stage of any property transaction. It occurrs a few weeks after the exchange of contracts.
On this day, the buyer’s solicitor transfers the purchase funds to the seller’s solicitor.
Once the money is received, the buyer gets the property keys.
This usually occurs between 10 a.m. and 2 p.m. on the agreed completion date.
Sell your property with We Buy Any Home
Finding a genuine cash buyer can be difficult.
We Buy Any Home are genuine cash house buyers. We can buy your property up-front and quickly, without hassle or stress.
You are in the perfect place to sell your house fast. Fill in our enquiry form below if you want a cash offer for your house.
