The definition of a cash buyer is someone who can buy a property without needing a mortgage. This means that they already have the necessary funds to buy a home in their account when they make an offer. This is great news for a seller, as waiting for people to obtain funds (normally from selling their own property) can take some time and even result in the sale collapsing. If someone doesn’t need to sell a house in order to buy, this means they’re not part of any property chain. Being chain-free tends to result in faster house sales.
Whilst there are of course downsides to selling your house to a cash buyer, these are greatly outweighed by the benefits.
As well as speeding things up, the fact a cash buyer doesn’t need a mortgage means the sale is more likely to go through. A study by Quick Move Now showed that a quarter of house sales fell through in Q1 2021 due to a buyer struggling to secure a mortgage, so a cash buyer is much more secure.
If a buyer requires a mortgage, the lender will scrutinise the property and refuse to lend if they aren’t happy with anything. For example, there isn’t long left on the leasehold or there is Japanese Knotweed on the property. This is not a problem with cash buyers as they aren’t reliant on a mortgage for their funds. However, they are likely to still undertake a survey to check if there are any issues so just make sure they are made aware of any quirks before they put in an offer, to avoid them pulling out or chipping the price.
As cash buyers do not need to free up funds by selling a house themselves, there is no chain to contend with. This is going to contribute to the speed of the sale, as well as making the sale less likely to fall through as there are fewer people in the chain.
Due to the benefits listed above, cash buyers have a strong negotiating position, so you’ll often get a lower offer. Also, whilst some cash buyers are looking to purchase a home for themselves, many are companies who are looking for a good deal. This is where you need to weigh up whether it is worth waiting for a higher offer from a buyer who needs a mortgage (and risk delays to your sale and it potentially falling through) or if you would prefer more security and a faster sale.
Like any house sale, having a cash buyer doesn’t guarantee the sale; just because there is no mortgage approval needed or chain their end doesn’t mean they can’t pull out of the sale. Cash buyers are still highly likely to get a survey done, so if any issues were to arise from that (for example, structural issues or damp) they may decide not to go ahead. And they can, of course, just change their minds! However, as cash buyers, Vivo will guarantee to buy your house once the formal offer has been accepted (following the surveys), so you can rest easy knowing that we won’t pull out of the sale.
You need to decide what is most important to you. Unless you’re very lucky, an offer from a cash buyer is likely to be less than your asking price. If you’re not willing to take a hit on the sale price of your house, then a cash buyer probably isn’t the right choice for you. However, a cash offer might be a good option if:
You need to sell quickly, perhaps due to moving abroad or debt
A buyer is unlikely to be able to get a mortgage due to problems with the house, such as structural issues, damp or needing extensive renovations
Your buyer has pulled out or been unable to secure a mortgage and you don’t want to lose the house you’re buying so need to sell quickly
The process of selling to a cash buyer isn’t much different. Their solicitor will still carry out property searches otherwise usually done by a mortgage lender. And, although a mortgage valuation survey won’t be required, they’ll probably still have a survey to check there are no issues with the property.
The only thing that you need to do differently when selling to a cash buyer is to get proof of the cash buyer’s funds (which is usually a bank statement), so you can make sure they have the cash. If they can’t provide proof of funds, it’s likely they aren’t true cash buyers. This isn’t necessarily a problem if you’re not in a rush to sell, as they are likely to need to sell a property before buying yours to release the funds. But, if speed is of the essence it’s best to find another cash buyer, either on the open market or opting for a property buying company like Vivo Property Buyers.
We are a property buying company specialising in quick sales. We have funds ready to buy and therefore we don’t need a mortgage to buy your home. On top of all of the benefits of a cash buyer listed above (including being able to buy in as little as seven days!), once you’ve accepted our offer, we will guarantee to buy your house and we will pay all of the fees. If you’re interested in a no-obligation offer for your home, just fill in our form and we will be in touch.
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