How to be a real cash buyer - pitfalls?

wizzywilc

I am a pensioner looking to downsize. As I have fairly specific requirements for what I want to buy, and was assured by EA that my house would sell readily, I did not put it on the market until I'd had an offer accepted. There was no interest in my house, and the house I thought I was buying was sold to someone who had cash in hand. The EA subsequently admitted that he had overvalued my house. He also said that about 60% of sales in my area were to "real" cash buyers i.e. people with money in the bank or close to exchange on a no-chain sale.

Reluctantly I have come to the conclusion that I should put my house back on the market after Christmas, and if necessary complete the sale and move into rented accommodation, so I can be a real cash buyer. This goes against the grain - I have never rented, but I can't see an alternative.

I'd welcome advice and thoughts from anyone who's done,or contemplated, this. What should I watch out for?

PS I'm changing EA!

Slithery

Why not just do what everyone else does and not put in any offers until you have a buyer for you place?

G_M

https://forums.moneysavingexpert.com/discussion/6082300/bridging-loan-from-dad

Smodlet

It will come as no surprise that this is a bad time to be selling, OP. If feasible, I suggest you wait until at least early Spring to market your property.

Good luck and I understand your reluctance to rent; I wish I had never had to and am grateful I don't now.

Davesnave

If what you want is very specific and possibly rare, then it makes sense to sell and rent, assuming there's nothing out there at the time when you sell.

We did it 10 years ago. Although there were factors like 6% interest on capital in the bank, which no longer apply, we'd still do it again in a fairly static or falling market.

In our case, there remained very little suitable coming to market. It was 6 months into renting before a sudden flurry of activity caused us to bid on 3 properties, all with some drawbacks. Two owners rejected our approaches out of hand, even though we had the cash, but the third was motivated and keen once she knew we were unencumbered. In other words we got a good deal and even fended-off a late gazump attempt.


Looking back, I'm not sure what we could have done differently. It was a nuisance being in rented for about 10 months overall, but we'd not be here today without the ability to move quickly and seal a deal that was put there with the express intention of selling fast.

anselld

wizzywilc wrote: »

PS I'm changing EA!

Good, because this one sounds like an idiot.

Cash buyers are the minority. Most sales are a chain of some sort.

However, it normally works the other way round, ie you first get an offer on your own making you "proceed-able" and then you can start making offers which will be taken seriously.

Your house should sell reasonably readily if it is correctly priced. Do your own research based on similar sold prices and find a decent EA (preferably recommended).

There should be no need to move into rented if you don't want to. Cash buyers don't have any real advantage over "proceed-able, under offer" unless it is a difficult-to-mortgage type of property.

Phil4432

The EA is talking absolute nonsense. This is what EA's do unfortunately. Compulsive, clueless liars.

An all cash buyer with money in the bank MAY have an advantage over another buyer, but in my experience its been very little. In the 80's it was certainly different but not so much now.

I wouldn't waste time and money renting. You property may go up in value, a rental will drain your finances.

Strongly advice to keep your present property and move directly from it, into the new place once acquired.

shinytop

OP, I'm currently doing what you're thinking about doing. We've had an offer accepted and everything looks like it's going through. We don't have dates yet but are expecting completion late Jan/early Feb. Apart from very general browsing to get an idea of what we can afford where, we've not looked at any houses to buy and plan to rent first. We want to be cash buyers who can move quickly and IMO this gives you two advantages (1) the seller knows you are not at the mercy of a chain and may take a lower offer because of this and (2) they know that if they mess you around or refuse to negotiate if issues arise (e.g. with a survey) you are more likely to walk. Also, doing it this way, my buyer knows I am not dependent on them to secure my dream home so (IMO) is less likely to mess me around.

The downside of course is that this approach comes at a cost - at least 6 months rent and an extra move. We will have interest on the money from the sale to offset this and because I'm recently retired I've got all the time I need. I appreciate this approach might not work for someone on a tight schedule or with kids and schools to worry about.

Davesnave

wizzywilc wrote: »

I am a pensioner looking to downsize. As I have fairly specific requirements for what I want to buy,

I think a lot depends on exactly what 'fairly specific' means.

I suppose with just 3 potentially acceptable properties within a large area in 6 months, we were very specific in our requirements. A fourth turned up shortly after, but there were never going to be dozens.

In those circumstances we had little choice but to rent. It wasn't like we hadn't tried the conventional route before. We had, and we lost out.

markin

Have you got a good pension? The have been a couple of threads in the last 6 months with people with huge bank balances but no income and they seemed to have real struggles getting a rental home even with offering 6 months rent. Maybe its easier in the north and they were all in the south who knows.

pinkteapot

I was about to say exactly the same as markin - and the problem is nationwide as we moved to Cumbria and rented.

Letting agents do credit and affordability checks. We were moving with over £400k in the bank but you still need an income. It’s absolutely bonkers. We didn’t have jobs lined up - we needed to find them on arrival. We only passed the pointless test because I moved a few weeks after my husband due to a long notice period at my job down south. At the moment of application I was employed still, so they said to put that on the form, even though they knew I was leaving to relocate and the job was 300 miles from the rental house!! Showing that they know how stupid the system is.

If you fail the checks the landlord can still agree to rent to you if they want, but I seem to remember some landlords commenting on here that it invalidates their landlord’s insurance?

I just found it utterly ridiculous. We could have afforded the rent for 20+ years even without jobs!

As markin said though, pension income will count.