Buying a House with Cash: The Process Explained

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Buying a House with Cash: The Process Explained
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When you sell your house to a cash buyer, you may be slightly confused about how the process works.

Below, we’ve answered the most common questions about buying properties for cash. 

What is a cash house buyer?

As the name suggests, a cash house buyer is a person or organisation who purchases a property with cash.

This means they do not depend on a mortgage to complete the deal and have all the funds needed upfront.

However, sellers should be careful. There are many illegitimate ‘cash buyers’.

Cash buyer’s perspective

From the cash buyer’s perspective, there are advantages to purchasing a property in this way.

Firstly, they can avoid the interest payments that build up on a mortgage.

Secondly, it enables them to buy houses that lenders will not offer on. This includes properties with a short lease, in terrible condition, or with a high flood risk.

Seller’s perspective

Sellers often view cash buyers favourably. This is because they are usually chain-free, and many cash buyers also use this to their advantage.

It is common for cash buyers to offer below the typical market rate for the house. They do this in the hope of ‘flipping’ it for a profit later (after making some renovations).

What makes cash buyers different to estate agents?

Cash buyers do not require a mortgage to purchase a property. They have the entire amount needed to spend up-front.

This means deals can be completed much quicker than with an estate agent.

There are several other significant differences, too. Cash buyers don’t always go through an estate agent to buy a house. They often work directly with the seller (especially cash-buying companies).

This avoids any estate agent’s commission being deducted from the sale price.

Cash buyers are also typically chain-free because they don’t rely on anyone else to complete a house transaction.

On the other hand, when you work with an estate agent, any buyer you find is likely to be in a chain.

There are additional perks to selling directly with cash buyers compared to an estate agent. For example, they may cover your legal fees, and complete the deal within as little as seven days. 

The Cash house buying process

1. Finding and contacting a cash buyer

Several cash-buying companies operate throughout the UK, and We Buy Any Home is one of the largest.

You can use internet search engines (Google). If you are searching for a solo property developer, then an estate agent may be able to put you in touch with one in your area.

It is also worth speaking to friends and family. They may know of potential investors, as some of these may be able to make a cash offer too.

Before you commit to a deal with any cash buyer, check that they have the funds needed to complete the deal. Ask for proof of funds and that there are no hidden costs or tie-in contracts.

If you hide defects in your house from the cash buyer, it could worsen your situation in the long term. You can be sued for damages if they discover them further down the line.

2. Ask for proof of funds

You can – and should – ask for proof of funding from your potential cash buyer.

In the UK, there have long been many people and companies offering to buy a property for cash. But many of these have turned out to be untrustworthy and never actually having the funds.

Getting proof of funding can reassure you that they are a legitimate buyer who can proceed with the deal.

If your cash buyer refuses to show proof of funds, this is a warning sign. You should reconsider selling a house to them.

There is very little reason for them to refuse to show proof of funding if it exists.

3. Find a solicitor

It is always a good idea to have legal representation when entering a house transaction. Especially if you are uncertain about any sale details.

Some cash buying companies will cover your legal fees. Solo property developers often don’t make this offer.

4. Have a survey carried out

The cash buyer or someone they have hired will visit your property to look around it.

They will value it, typically including a survey to assess any faults with the property.

5. Organise paperwork

Selling to a cash buyer is still a property transaction like any other. So, you need to have the correct documentation in place.

Depending on the circumstances, you may still require:

An Energy Performance Certificate (EPC)

The completion of a survey

An official exchange of contracts.

On the other hand, some cash buyers will be OK with seeing an EPC or completing a survey. This varies for each situation.

Any documentation around your buyer’s mortgage will not be required. This is because they are purchasing the house without borrowing any money from a bank.

How long until the money arrives in my account?

Once you agree to a sale with the cash buyer and all the contracts are signed, the funds should be deposited in your account within 24 hours. (Excluding any bank delays that may occur over a weekend).

You should get proof of funding before committing to the deal to ensure they have the means to pay you.

Am I charged a commission when selling to a cash buyer?

Unless you are using an estate agent, there should not be any commission on the sale to a cash buyer.

Cash buyers can purchase your property independently of an estate agent. This enables you to save on the costs that would be associated with commission.

Therefore, even if the cash offer is slightly below market value, you may receive the same amount in the long run.

Do cash buyers have cancellation or withdrawal fees?

This varies according to each cash buyer.

We Buy Any Home’s cancellation/withdrawal policies

As a large and experienced cash house buying company, we have developed a fair and effective approach to cancellations.

If we need to change our offer – for example, because a defect has been revealed in a property survey – then you can withdraw free of charge. 

If you simply change your mind, there may be a small charge depending on the resources and time we’ve invested in your property sale up to that point.

However, we handle each situation individually and understand everyone’s circumstances.

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