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What does "cash offers only" mean when buying a house?
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# 1
slicendice
Old 18-04-2011, 12:00 PM
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Default What does "cash offers only" mean when buying a house?

Hi everyone
Sorry if this is a really stupid and/or obvious question, but can anyone tell me what it means when a house is being sold and it states in the advert "cash offers only"?

At absolute face value, it almost sounds like they don't want anyone who's going to have to get a mortgage and only want bids from buyers who can turn up with a massive suitcase full of 20 notes - but surely it can't mean that? Does it really mean you need to have that much money in your bank account?

Or does it just mean that normal mortgages are OK and it's just that they don't want any weird financial offers/situations (e.g. I'll offer you [asking price - 40%] plus this lovely shed and a slightly used Vauxhall Vectra)?

The price being asked does seem quite cheap given the size of the house and the area it's in (i.e. it's a good sized house in a nice area)...should the "cash only" thing ring alarm bells?

Thanks very much!
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# 2
Angela D
Old 18-04-2011, 12:01 PM
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Unmortgagable basically, it's in such bad condition the banks will not lend you money to buy it.
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# 3
poppysarah
Old 18-04-2011, 12:05 PM
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Or it's been sold recently (More lenders aren't lending on propertys sold in the last 6 months)
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# 4
kingstreet
Old 18-04-2011, 12:06 PM
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Yep. Likely to be unmortgageable so they are looking for buyers who won't need one, not necessarily someone with a suitcase full of used twenties.
I am a Mortgage Adviser. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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# 5
TOBRUK
Old 18-04-2011, 12:13 PM
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Isn't it sometimes that asking 'cash buyers only' mean that they don't want anyone who are looking with any property to sell, no chain etc so that the sale can go through quickly?
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# 6
mlz1413
Old 18-04-2011, 12:14 PM
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Yep unmortgagable, ie you need cash to buy it as no one will lend you the money.

the house may have structrual problems or covenants that make it undesirable. EA will sometimes say why its cash only ie sitting tenants.
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# 7
Seanymph
Old 18-04-2011, 12:19 PM
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Quote:
Originally Posted by TOBRUK View Post
Isn't it sometimes that asking 'cash buyers only' mean that they don't want anyone who are looking with any property to sell, no chain etc so that the sale can go through quickly?
Nope - you can be a cash buyer in a chain - it just means you have a big suitcae full of 20's - or a house of higher value to sell if you are downsizing.
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# 8
slicendice
Old 18-04-2011, 12:30 PM
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Thanks for all the responses everyone - much appreciated.

The house itself appears to be in very good condition - obviously that's just from outward appearance at this stage so accept that there may be "unseen" issues. The inside has recently been refurbished and looks to be in extremely good condition, and certainly doesn't appear to be uninhabitable or in such a bad condition that it wouldn't be possible to get a mortgage on it.

I'm wondering if it's more the possibility specified by poppysarah and it's recently been bought and renovated....and maybe the renovator's run out of money?

What's the situation in terms of bidding on a property like this? Might it be possible to negotiate more than usual?
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# 9
Seanymph
Old 18-04-2011, 12:33 PM
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It could be non traditional construction - or suffered subsidence - or something else that you can't see.
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# 10
ClareyFairy
Old 18-04-2011, 12:36 PM
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agree with the above poster, it is often that the house is non standard construction. This applies to lots of homes built after the war. They werent built to last and therefore are often unmorgageable. hth
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# 11
kingstreet
Old 18-04-2011, 12:46 PM
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If it appears outwardly fine, I would imagine the issue is the land it's built on. Is it in a former mining area? Is it in an area with problems with subsidence or soil shrinkage?

Inability to insure it could make it unmortgageable, so has anything been done to make that a problem?

How long's it been on the market? Is it in an auction?
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# 12
westernpromise
Old 18-04-2011, 12:50 PM
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You have to wonder why sellers stipulate this. It can only have the effect of reducing the size of the buyer pool, which in turn is going to reduce the number of bids made, one of which might have been the highest.
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# 13
kingstreet
Old 18-04-2011, 12:54 PM
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Quote:
Originally Posted by westernpromise View Post
You have to wonder why sellers stipulate this. It can only have the effect of reducing the size of the buyer pool, which in turn is going to reduce the number of bids made, one of which might have been the highest.
I'd say this level of honesty is both refreshing and useful. If previous purchasers have tried to buy using a mortgage and have been unable to do so, it seems churlish to keep schtum and allow more and more people to waste money knowing full well they are likely to have the same result.

In addition, the vendor and the agent would be continually wasting their own time. Realistic and pragmatic approach IMHO.
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# 14
Jenniefour
Old 18-04-2011, 12:59 PM
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Could be someone running out of money and trying to get a very quick sale. Or someone who prefers not be hanging on wondering if their buyer will actaully get their mortgage approved - so many sales are dropping through because some don't appreciate how much tighter mortage lending conditions have become. Or it's not possible to get a mortgage on it at all for some reason. I would be getting back to the agents - if you're interested in it - and find out what's going on.

Last edited by Jenniefour; 18-04-2011 at 1:40 PM.
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# 15
mlz1413
Old 18-04-2011, 1:12 PM
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Quote:
Originally Posted by slicendice View Post
Thanks for all the responses everyone - much appreciated.

The house itself appears to be in very good condition - obviously that's just from outward appearance at this stage so accept that there may be "unseen" issues. The inside has recently been refurbished and looks to be in extremely good condition, and certainly doesn't appear to be uninhabitable or in such a bad condition that it wouldn't be possible to get a mortgage on it.

I'm wondering if it's more the possibility specified by poppysarah and it's recently been bought and renovated....and maybe the renovator's run out of money?

What's the situation in terms of bidding on a property like this? Might it be possible to negotiate more than usual?
Give the agent a ring and ask if its cash buyers or no chain buyers and why they have put that in the advert.

if the house is unmortgageable then negotiations could well be in the buyers favour, but if 2 buyers are interested then there is less chance of a bargin.

if the house has been done up and the investor is selling because its finished, then they may just want a quick sale to avoid a falling market and interest rates rise.

if its because the investor has run out of money then it depends how much hasn't been done and if its being sold by the investor or by the mortgage company.
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# 16
2bFrank
Old 18-04-2011, 1:24 PM
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I would defo find out what is going on before you even dream of trying to buy the house.

Banks will give out mortgages for most houses, even non standard. The issue is usually to do with insurance. If insurance companies will not insure a house (due to construction, damage etc) then your chances of a mortgage is virtually nil. Plus if you carnt get insurance, your risking all that money on a pile of bricks, that is very likely to fall down soon.

There are some speciality insurance companies that will insure some dodgy houses, and if you can find the insurance, you are more likely to find a mortgage company that will lend to you. However this would be a nightmare, I would hope the price reduction is really worth the effort.
Jumping into the housing market head first.
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# 17
Jaynne
Old 18-04-2011, 1:29 PM
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Have you asked the estate agent? One two minute call should sort it out?

When I saw the post I thought it meant someone without a chain only but other explanations of it being unmortgageable are also reasonable.

As to honesty, well they probably don't want to waste their time because if its unmortgageable then this would be picked up in the survey and the sale would fall through.
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# 18
slicendice
Old 18-04-2011, 3:08 PM
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Sorry, one other thing I should have mentioned - the ad originally stated that all offers should be submitted by 31st March. Obviously that date has come and gone and it's still on the market.

I don't know if that time deadline would indicate the presence of a renovator who's run out of money, and hence the need for a quick sale...?
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# 19
jackomdj
Old 18-04-2011, 7:25 PM
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My old house was unmortgageable. I bought it with a mortgage, later the mortgage co's introduced a compulsary test for concrete cancer for houses in our area of a certain age & my house had it.

We got fed up with the estate agents sending people round that would offer but be ubable to get a mortgage! In the end we sold to a structural engineer but told them they had to complete by a certain date (within four weeks) otherwise it was going to the auction it was already booked into.
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# 20
eschaton
Old 18-04-2011, 7:56 PM
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There's really a simple choice here.....

1. Phone the estate agent and get a definite answer in a few minutes.

2. Come onto this forum and ask a bunch of strangers that can guess all day but really don't know the answer.


You decide
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