If you’re wondering what’s the best way to buy property for less money, or if you hate the idea of being in a conveyancing chain, then you’ll probably like the main advantages of being a cash buyer.
The best advantage of being a cash buyer is you can often buy property for less, as it gives you the power to put in cheeky offers. Buying property for less than a buyer in a chain means you’ll have more equity in your house, you save on buying costs, and you save huge sums on mortgage interest.
By the way, a buyer in a chain is a “chain-locked buyer” which is someone who has a house to sell, which puts them in a conveyancing chain. A chain-locked buyer isn’t as attractive as a cash buyer because they have a house to sell, which could fall through for many reasons, and will mean the buying process could take longer or fall-though altogether.
What does it mean if you are a cash buyer?
A cash buyer is a person who can purchase a property outright with the money they have at their disposal and they are not dependent on the sale of another property. This usually means they don’t need a mortgage to buy the property, but not necessarily, as a mortgage provides disposable money to buy.
The most important aspect of a cash buyer is for them not to be dependent on the sale of another property. Which means if you can find a way to sell your current property, but before you buy your next one, you could make yourself into a cash buyer.
It is for this reason that I urge you to read this article “Are you better selling your house and renting before buying again?”
In this article there are no less than 15 advantages to selling first and moving into rented accommodation before you buy again.
These advantages begin with becoming a stronger buyer, as you are no longer in a sales-chain. However, it’s important to add that there are also 11 disadvantages to this strategy too. But in my opinion, the advantages far outweigh these disadvantages.
If you decide to run with this strategy, you’ll also most certain benefit from taking a look at the course I’ve written too. There’s a link below in the next section to this course.
Not only will this course help you sell you current house faster and for more money if you’ve not yet sold, but there’s a lesson on the subject of selling and renting before buying another house too, plus you get to download the Mortgage Savings Calculator Tool too. Please read on to find out more...
How do you qualify as a cash buyer?
If you’re a cash buyer you’ll need to show proof of funds, which includes proving total funds for an outright purchase. But this also includes proving cash for a deposit alongside proof of a mortgage in principle. Proof of funds includes providing a copy of a bank statement showing available funds.
You may find that a seller would prefer a true cash buyer who has the total funds necessary for an outright purchase, without needing a mortgage. But given the choice between a cash-buyer who needs a mortgage vs a buyer who has a house to sell, sellers would still favour this type of cash buyer in most cases, as the conveyancing process will be faster and less likely to collapse.
However, there is a downside of a cash-buyer who needs a mortgage, as they are not quite such a strong buyer as a cash buyer who doesn’t require a mortgage, which is because there’s always the chance the mortgage application will fail.
There are also properties that can only ever be purchased by cash buyers who don’t need a mortgage, as the property is not mortgageable.
Why is it better to be a cash buyer and what are the advantages?
- There’s less risk to the seller that the sale will fall through resulting from a break down in the sales chain.
- The sale will be faster.
- Properties are more likely to be purchased at a discount.
- Sellers will feel more secure in the knowledge the sale is more likely to proceed to completion.
1. There’s less risk the sale will fall through resulting from a break down in the sales chain with a cash buyer
If you are a cash buyer it means you’re not in a sales chain and you’re not reliant on the sale of a house, which makes you one of the most desirable buyers that sellers will meet. The advantage to you is that you become a favoured buyer and this will in itself give rise to sellers potentially accepting lower offers.
If you still have a house to sell, but you like the idea of becoming a cash buyer, you may like the idea of finding out how to sell your house faster and for more money.
If you do, then you might like this course I’ve written, which is especially for homeowners like you.
This video course called “How you sell your house in under 2 weeks for money.”
This course not only teaches you how to add value to your house and how to sell it fast, but it also comes with a free Mortgage Savings Calculator Tool. When you click on the above link, scroll to the section about the bonuses and how you could save £51,852 on your next house purchase if this next house would have cost £250,000.
But this gets even more exciting if your next house would normally cost £500,000, where you could save £148,615.
I also explain more about this concept in this article where you could save £71,475 on your next purchase, which in this case is where you planned to buy a house for £350,000.
Wherever you are in your house journey, you should take a look at the above article and the course page too. Even I was amazed at the savings that are possible with this strategy when I did the calculations. It is this that inspired me to build the calculator tool and to write the course.
2. Being a cash buyer you can move faster than a buyer who needs to sell a house first
As a cash buyer you can move much faster, as you don’t have a house to sell. Your solicitors only have to contend with one property transaction and you don’t waste time waiting for your house sale to finalise. This is an advantage to you, as it can translate into being more cheeky with your offer.
If you want to know what percentage a cheeky offer is, you should take a read of this article about “what % is a cheeky offer on a house and is it okay to offer less than asking price.” But then you should also take a read of this article that explains the 10 key points to making an offer on a house at below asking price. Please note key point number eight when you read this article.
3. Cash buyers are more likely to buy properties at a discount to asking price
Cash buyers can often buy properties with a bigger discount than buyers who still have a house to sell.
According to Landlord Today, cash buyers can expect to pay on average 9% less for properties. This discount is based on cash buyers who don’t require a mortgage, but buyers requiring a mortgage who don’t have a house are just as likely to buy properties at a higher discount than a buyer who has a house to sell.
4. Sellers will feel more secure in the knowledge the sale is more likely to proceed to completion with a cash buyer
A cash buyer is a more secure proposition, as there are less things to go wrong with the purchase, as the buyer doesn’t have a house to sell at the same time.
This means the seller will be able to feel more confident the sale will proceed to completion. Which means less stress for the seller.
How to best understand the advantages of being a cash buyer in the mind of a seller
I find that the best way to understand how something will benefit another person is to put yourself in their shoes. So if you put yourself in the shoes of a seller, you’ll find it easier to understand the emotions involved with selling a property and what’s involved with choosing your buyer.
Have a think about each of these questions, as if it were your house you’re trying to sell on the basis you have a choice between accepting an offer from a cash buyer vs from a buyer who needs to sell their house first:
- Which would you choose if the offers were the same?
- Would you choose the cash buyer’s offer if it were 5% less than the offer from the buyer who needs to sell their house first?
- What about if the offer from the cash buyer were 10% less than the buyer who needs to sell their house first?
- How about if the offer from the cash buyer were more than 10% less than the buyer who needs to sell their house?
- Which would you choose if the offer from the cash buyer were 10% less than the buyer who has to sell first, but you need to sell fast due to a job relocation or due to moving abroad?
- What about if the offer from the cash buyer were more than 10% less than the buyer who has a house to sell at a time when you are having problems paying your mortgage or at a time when you’re going through a divorce.
I’d like to think by reading each of the above scenarios, you’ll be able to put yourself in the shoes of the buyer to understand the power of a cash buyer.
In many of the above scenarios, an offer from a cash buyer may be the more attractive offer, even when the offer is lower. However, the offer that is ultimately accepted will depend on the seller’s emotions and circumstances at the time.
But if you add the complication to each of the above scenarios, whereby the buyer who has another house to sell is in a long conveyancing chain. In this scenario, how would this affect your decision if you’re the seller in each of the above situations?
I’m not sure what the longest sale’s chain has been, but if you imagine for a moment how your decision would be affected if you had a choice between a cash buyer vs a buyer who has 4-5 buyers in a chain above them. The risk of this sales-chain breaking down, or from the sales process taking much longer to complete, are increased dramatically.
You might like to read about what happens when a house chain breaks. This article includes all the reasons why and how a sales-chain can go wrong. This in itself may be enough to convince you as to why it is an advantage to be a cash buyer on its own.
Do you need a mortgage if you are a cash buyer?
A cash buyer doesn’t need a mortgage if they have the full funds necessary to buy a property outright. But if a cash buyer decides to use a mortgage to buy a property instead of using their own funds, they’re still regarded as a cash buyer based on not having a house to sell in order to proceed.
Is a first time buyer a cash buyer?
A first time buyer can be considered a cash buyer whether or not they require a mortgage, as they won’t have a house to sell. If a mortgage is required to fund their purchase, this doesn’t mean the first time buyer isn’t also a cash buyer, it just means their cash includes funds sourced from a mortgage.
Final thoughts about the advantages of being a cash buyer
What often holds people back is the fear of change or of doing something different. But having just listened to Sophie Morgan speak about the fear of change, I like how she explains how we should “lean into change“, or in other words embrace change and think about what is the worst that could happen.
This may not apply to you if you have the cash to buy your next property and don’t require a mortgage.
But if you are trying to decide whether or not to change how you sell your current house and buy your next one, you may want to consider this change.
Please take a moment to read the article about selling your house and renting before buying again, but also please consider investing in my course too.
If you put everything you learn on the course into action, the small course investment will more than pay for itself over and over for many years to come. How To Sell Your House In Under 2 Weeks For More Money.
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