The Cash buyer

Crashy_Time

davidmcn said:

No real "leverage" other than you can tell people you won't need to apply for a mortgage. Sellers are likely to accept the highest (proceedable) offer irrespective of where the money is coming from. Other parties are entitled to be sceptical about how readily you will hand over your cash until you actually do so.

True, but in the present climate the cash buyer has the advantage.

MobileSaver

davidmcn said:

Sellers are likely to accept the highest (proceedable) offer irrespective of where the money is coming from.

^ This.

I bought my last three properties with cash; 99.9% of sellers would happily wait the extra few weeks for your lender's cash rather than knock £5k or £10k off to get your cash a few weeks earlier.

Being chain free could make the difference in your offer being accepted over someone else's at the same price but it will only translate into a discount if you have an exceptionally desperate seller.

blue_max_3

MobileSaver said:

I bought my last three properties with cash; 99.9% of sellers would happily wait the extra few weeks for your lender's cash rather than knock £5k or £10k off to get your cash a few weeks earlier.

Being chain free could make the difference in your offer being accepted over someone else's at the same price but it will only translate into a discount if you have an exceptionally desperate seller.

It may depend on the market to some extent. In a rising market, the pressure is on the buyer. Whereas in a falling market, the pressure is on the seller. 

GDB2222

MobileSaver said:

davidmcn said:

Sellers are likely to accept the highest (proceedable) offer irrespective of where the money is coming from.

^ This.

I bought my last three properties with cash; 99.9% of sellers would happily wait the extra few weeks for your lender's cash rather than knock £5k or £10k off to get your cash a few weeks earlier.

Being chain free could make the difference in your offer being accepted over someone else's at the same price but it will only translate into a discount if you have an exceptionally desperate seller.

I’ve lived through a couple of deep drops in the property market since the 1980s, and these can be times when there are very few buyers around. At the same time, there’s a steady stream of people very keen to sell - redundancy, death, divorce, and illness are the main reasons.  

What I’ve seen then is a sort of two tier market. People still form chains and sell to each other at close to the old prices, but that’s a slow process. At the same time, there are quick sales going through at a substantial discount.  Mortgage valuations are depressed because the banks need to know what they can get on a forced sale.

seven-day-weekend

We have bought as genuine cash buyers, (no mortgage, money in bank, no chain).  We bought a property that was empty.  The conveyancing still took several months.  It made no difference as far as I can see.

KiwiCoop

As a developer, I've achieved discount via cash purchases maybe 20% of the time, usually due to one of the following:
- seller has had a sale fall through and doesn't want to see it happening again
- the house needs work and I stress I won't be getting a survey done that might affect my offer
- it's an inherited property and the benefactors just want their money asap
- it's a repossession/bank sale
The greatest advantage is not having a lender/surveyor involved.  To suggest not being in a chain makes you a cash buyer is nonsense.  I would anticipate/hope cash buyers will be in a stronger negotiating position in the short-term due to the uncertainties around banks' lending appetite, reduced buyer demand and valuation uncertainty.

Semple

OldMusicGuy said:

I am a cash buyer and recently made an offer on a place recently at 6% under asking, the EA said that there was someone else interested who wasn't a cash buyer and was prepared to pay close to asking price. I played the "but we are cash buyers and there is a coronavirus crisis looming" (this was just before lockdown) and my offer was refused in favour of the other buyer (who subsequently made an offer on the property which has been accepted). I was surprised that there was zero interest from the seller in us as buyers. We were genuinely interested in the property. 

I think it'll also depend on how much that 6% equates to. On a 150k property, that works out at 9k, which may be enough to sway someone towards a cash buyer. On a 450k property that's 27k, which if a mortgage buyer is paying close to 450k, then that's a fair amount of money to discount it buy, just because of a cash buyer. 

Frankly if your financial situation isn't too complicated, a mortgage doesn't take long to secure. I think we had ours nailed down in around a week, it was the conveyancing process that took considerably longer. Which then gives neither a cash buyer/mortgage buyer an advantage. 

bucksbloke

OldMusicGuy said:

I am a cash buyer and recently made an offer on a place recently at 6% under asking, the EA said that there was someone else interested who wasn't a cash buyer and was prepared to pay close to asking price. I played the "but we are cash buyers and there is a coronavirus crisis looming" (this was just before lockdown) and my offer was refused in favour of the other buyer (who subsequently made an offer on the property which has been accepted). I was surprised that there was zero interest from the seller in us as buyers. We were genuinely interested in the property. 

I think as a cash buyer you may be more attractive to some new build developers, especially in the current climate. You can certainly try to play that card to get some incentives, we did. 

I get it is easier for you to proceed, but not sure why a seller would offer you a discount because you don't need a mortgage.
Actually, I prefer to deal with people who need a mortgage, they often have to pay for a broker/valuation etc upfront and you know that you they proceeding. I've been messed around by literally every person who told me they are a cash buyer. 

MobileSaver

KiwiCoop said:

As a developer, I've achieved discount via cash purchases maybe 20% of the time,

I am very surprised at this and think you have just been very lucky or the discounts were negligible; around a third of all house purchases are cash sales so if 20% of all those were getting significant discounts that would have an undoubted effect on house prices.

KiwiCoop said:

- seller has had a sale fall through and doesn't want to see it happening again

I can sort of see the logic but can't believe that that many people would give up £10,000 or more in such a case especially as there's still no guarantee  a cash purchase will not fall through.

KiwiCoop said:

- it's an inherited property and the benefactors just want their money asap

Again hard to believe that that many beneficiaries would give up £10,000 or more just to get the money four or six weeks earlier.

KiwiCoop said:

- it's a repossession/bank sale

This is by far the most surprising one; banks have a legal obligation to sell for the best price they can reasonably get. It's hard to see how they can justify a discount just to get the money a few weeks earlier; they're clearly opening themselves up to a legal challenge.

As I said I think you have been extremely lucky and your discount experience is not typical of most cash buyers.

GDB2222

We’ve had a period when it was fairly easy to get a mortgage with a 5% deposit. In such circumstances, it’s expected that buyers with a mortgage in principle will get the funding they need. So, indeed, why prefer a cash buyer?

 But, what if things change? If lenders start only doing 80% LTV, or even 90%, that will drastically reduce the number of potential buyers. Lenders may also be more picky about what they will lend on.  Then, having a buyer who can definitely proceed is an advantage. 

It’s not just getting the money a few weeks earlier. At today’s low interest rates, that’s not worth a lot. There’s Council tax, insurance, maintenance, general deterioration. With a repo, there’s still interest running on the mortgage.