If you go into any estate agent to buy a house it seems to be that if you say that you are a cash buyer they see your position stronger than somebody else. But what does being a cash buyer mean?
The most commonly held belief is that a cash buyer is somebody who does not have a property to sell, is not in a chain and is able to buy a house quick. Another need for cash buyers is when a house is a problem property. This can be when the house is uninhabitable, has structural problems or is built by in a non standard way. If your property is uninhabitable many mortgage lenders will not lend to the person buying it as if they had to take possession they feel that they would struggle to sell the property. This in my opinion is very short-sighted as it can take very little effort and cost very little to make a property habitable again. Properties with structural problems can be a little trickier. I have seen many properties become un-mortgage able due to supposed structural problems that surveyors have mentioned in valuation reports. Many times they say this when the property displays any sign of past movement. In reality many structural problems are easy to fix with the biggest cost being finding out what is wrong with the property in the first place. Properties built in a non standard way can also be hard to finance and so the buyer has to use cash. Examples of non standard construction include Wimpey no-fines, Reema, Cornish, and Laing Easi form. There are many other forms of non standard construction, with some being mortgage able and some not.
Another definition of a cash buyer of property, and the most obvious, is the buyer who has the money to buy a property without using finance or mortgages. These people are normally property investors or people who have sold there property already and have the funds in the bank.
A cash buyer can also be defined as somebody who uses mortgages but can move very quickly to completion. Again many of these are property investors or more commonly property buying companies.
Many of these people want to get the property below market value and a cash offer would normally mean a reduced offer on the property they were buying.
As somebody taking a cash offer you can use this to your advantage as if you accept a cash offer it also puts you in the position of a cash buyer. As vendors and estate agent covert these types of buyer then you too good get a price reduction on your next property. On average a property can be purchased for 7% less by a cash buyer compared with the rest of the market. This means that if you accept a cash offer you can probably negotiate a better deal on your next property.
Whenever I buy a property I always say that I am a cash buyer of property to benefit from these perceived benefits and would advise others to do so also. Rather than actually being a cash buyer of property and having loads of money in the bank to purchase properties with, it indicates a willingness to get the property bought quickly and with the minimum of fuss. I believe it is this that the agents are looking for rather than an actual cash buyer. At the end of the day all property transactions are by cash unless you find a seller who is prepared to take payment in any other way. To my knowledge I cant think of any seller who has.
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