What is a cash buyer

steve1ae

Hi All,

My partner and I are in the process of bidding on a house. We have fallen into a bidding war with two other couples however, the other couples are in a chain whilst we own our current home. We are also fortunate enough to be able to move without selling our current home to finance the move. Basically we would look to finance about 80% of the house with the remaining 20% coming via a small mortgage.

This has got me wondering... what exactly is a cash offer? Are we not technically all cash buyers? Is it defined as being strictly 100% cash? What about 80% cash and a 100% guarantee of the remaining 20% as mortgage? Do the estate agents even need to know or even be concerned if I tell them we are cash buyers?

Any thoughts? I have suggested this to my partner but unless I can get some verification from someone else, my opinion doesn't really mount to much (if at all) I guess there is a reason for that - it might be completely off the wall in which case feel free to hurl some insults my way

Thanks in advance

glentoran99

A cash buyer is someone who isn't getting a mortgage

Nobbie1967

You're a chain free buyer like a FTB, but I'd not consider you a true cash buyer as despite only needing a 20% mortgage, it will still take just as long to sort out as a 90% mortgage. Aside from being chain free, you also have the advantage that should the survey find problems or undervalue, you have plenty of scope to continue with the purchase.

The EA will want proof of funds if you say you are a cash buyer and as you only appear to have 80% in cash! you can't provide this.

HouseBuyer77

I'd say a cash buyer is someone who can get the cash required to complete the process at short notice without relying on anything else happening. So having the money in a savings account or some easily liquidated asset.

So you're not a cash buyer, however you are chain-free which is more important. Only needing a small mortgage also helps as it demonstrates you're more likely to get it. I'd certainly tell the agent both of these things.

Don't just say you're a cash buyer, as they could see it as a deception which is not a great way to start a purchase.

AndyBSG

glentoran99 wrote: »

A cash buyer is someone who isn't getting a mortgage

This.

If you have the money in your bank to buy the house then you're a cash buyer.

One of the huge appeals of a cash buyer is that there's no bank/building society appointed surveyor involved who will value the property on the mortgage providers behalf to make sure they agree it really is worth the money you are asking to borrow.

It also means there's no last minute issues with decisions in principle failing at the actual final decision stage.

dc197

I had this very discussion with an EA, after I heard the term used in two different ways.

A cash buyer is, as has been stated, someone buying without a mortgage.

But another definition is a buyer who doesn't need to sell an existing house, even if they still need a mortgage. For example if a buyer has already sold their house, has the cash in the bank, and is renting etc until they buy.
This latter definition is not my definition, it came from an EA.

MrJB

My interpretation is that they are a buyer that does not need a mortgage or need to sell a property. Ie have the funds in liquid form to be in a position to complete.

I asked Google to define the phrase and it came back with...

cash buyer

noun

noun: cash buyer; plural noun: cash buyers

a person who is able to buy something, especially a property, without needing to take out a mortgage or loan to do so.

Thrugelmir

HouseBuyer77 wrote: »

Only needing a small mortgage also helps as it demonstrates you're more likely to get it.

Still a potential delay or two while formalities are dealt with.

Marvel1

To me it's someone who can hand over the funds right now to buy the house.

PasturesNew

A cash buyer is somebody who has the cash, their cash, available on a whim. Their money, they just count it out and hand it over.

Anybody thinking that any form of formal borrowing to buy is a form of cash buyer is just being delusional.

A cash buyer makes all the choices.
Anybody borrowing isn't guaranteed to get the money, or get it by a particular date, or get it without leaping through some hoops.

theartfullodger

Cash buyer?? Someone who when you ask "can you complete within 7 days then" is able to say "yes". There is no "legal" definition...

Some people state they are cash buyers (they may have the cash.. - so kinda..) but then get a mortgage anyway (I did, twice, buy2lets... ).