Benefit of being a cash buyer?

NervyBuyer

I was looking to buy with cash, but there seems to be quite a lot of competition for places in my cash price range and things selling quickly. When EAs have asked me whether I'm interested in making an offer and I've raised reservations about prices, they haven't mentioned anything at all about cash buyer status (they know my position) - I thought maybe they would have said something like 'paying cash puts you in a stronger position to negotiate' or something. So I'm wondering if it's not really much of an advantage after all. (I haven't actually managed to make any offers yet - by the time I'd deliberated on the 3 places I might have offered on they'd already gone).

If I take out a small mortgage (10-15% LTV) which is very affordable for me (~5% of net income) and wouldn't be a problem in case of downvaluation, I can look at things in a slightly higher price range which might not be so competitive and also gets me something that's less of a compromise on space/layout/location. Without needing to sell I'd still be in a fairly good position (I'm not looking at typical FTB territory so I'd imagine most buyers would also be selling).

Another option is to wait and save more and hope prices don't go up again over the next few months.

Any thoughts/experience on this?

theartfullodger

Speed, no waiting for lender surveys.  Done it a few times, does not help with most sellers.

Bought for a lot less than offers over price once.

RHemmings

I got a lot of disinterest in my cash buyer status early on. However, the further along I get in the process, the more obvious it is that my status is very useful and desired. When you make an offer, make sure that you emphasise your cash buyer status and that you don't need a mortgage and that therefore there is less risk of the sale falling through. 

All the YouTube videos on how to view houses seem to say that viewers shouldn't let on that they love the property even if they do. As I've seen pointed out, Estate Agents negotiate on houses day in day out and will be very experienced. It's now my opinion that their seeming disinterest in my cash buyer status wasn't real. 

I never saw any real interest until they were arguing about my offer, and I said basically 'OK, then we can withdraw the offer and if both myself and the property are still on the market in January we can try again'. They immediately changed the topic and then things proceeded. 

If you have the PatMa Chrome plugin, then you can see which houses have 'sold' before and come back on the market. If you are interested in offering on a house then you can check if it has had failed sales, and this could be something you mention in your offer. 

It could easily be the case that me being in a different part of the country where it may be less competitive is making a difference.

If you end up making offers and they are rejected, then I would be more concerned. If you aren't yet at that stage, I wouldn't take their apparent lack of interest seriously. 

One Estate Agent took time to explain the importance of my cash buyer status to me. Even during negotiation. But, my son didn't like that area. They phoned me up several times and clearly wanted me as a buyer. But, there wasn't a suitable property on their books. 

Others may overrule me, but if I were you and I was preparing to make an offer, I would ask straight out 'does my status as a cash buyer make me attractive to the seller and yourselves as there is less chance of the purchase falling through?' To get a straight answer, rather than rely on impressions. 

I'm not experienced in buying houses; I'm just sharing my personal experience and beliefs here. Others with more experience will comment. 

DullGreyGuy

It's up to you to sell the strengths of your offer not the estate agent, they work for the vendor not you. 

Generally the strengths are the speed you can move at and the increased certainty of not at risk of a lender saying no or your chain falling apart (clearly first time buyers also offer the no chain benefit even though they are to be mortgaged). The question is if any of these things of benefits to the sellers? Have they found where they are going so want to move quickly or have they not even started looking yet. Some may prefer to gamble on a higher value and a mortgage lender not agreeing -v- accepting a lower offer from a cash buyer.

35har1old

DullGreyGuy said:

It's up to you to sell the strengths of your offer not the estate agent, they work for the vendor not you. 

Generally the strengths are the speed you can move at and the increased certainty of not at risk of a lender saying no or your chain falling apart (clearly first time buyers also offer the no chain benefit even though they are to be mortgaged). The question is if any of these things of benefits to the sellers? Have they found where they are going so want to move quickly or have they not even started looking yet. Some may prefer to gamble on a higher value and a mortgage lender not agreeing -v- accepting a lower offer from a cash buyer.

If you make a offer the Estate Agent will likely as for prove of money available 

_Penny_Dreadful

Too many people claiming to be cash buyers do a bait and switch quite far down the line where suddenly they decide they do want to use a mortgage after all or attempt to gazunder at the 11th hour.  That’s why it doesn’t make you look better to many sellers. 

RelievedSheff

Quite frankly if I am selling a property I don't care if the buyer is a cash buyer or needs a mortgage. 

I care about getting the best price available for the property. How the buyer funds that is completely up to them.

Bigphil1474

We sold my dads house in July to a FTB - they offered less than a couple selling their house, but we wanted a quicker sale as the previous sale had fallen through from a cash buyer. The cash buyer was unable to prove where his money came from so pulled out. As a seller I'd always chose a cash buyer/FTB first. Not sure the mortgage element concerns me so much, so long as the offer is acceptable. I'd prefer to keep the chain as short as possible, so would be willing to lose a few £k for that.

RHemmings

I followed the recommendations online and provided my proof of funds attached to the email where I made my offer. 

user1977

Also depends what people mean by "cash buyer". For some it's actually having cash in the bank ready to hand over ASAP, others just mean not buying with a mortgage (but the "cash" is tied up in a property they've yet to sell, or in some other investment they need to sell, or an inheritance from an estate which isn't sorted yet, or...).

RHemmings

user1977 said:

Also depends what people mean by "cash buyer". For some it's actually having cash in the bank ready to hand over ASAP, others just mean not buying with a mortgage (but the "cash" is tied up in a property they've yet to sell, or in some other investment they need to sell, or an inheritance from an estate which isn't sorted yet, or...).

When I told EAs that I am a cash buyer, they asked me questions to check that I actually had the cash.