We are seeing more and more instances of a ‘cash buyer’ not turning out to be what they say they are, so we are here to outline exactly what one is, and how to make sure you have one.
Some sellers will be enticed by a cash buyer, and may even lower the asking price in order to obtain a quick sale with a cash buyer.
In reality, a cash buyer is somebody who has the cash in their bank in order to purchase the property, and they do not need anything else to take place before completion of this property.
This means they do not;
Need to sell their property before buying yours. Sometimes buyers say they are cash buyers after their sale and do not need a mortgage. However if they are reliant on a sale you are in a chain and they are not in reality ‘cash buyers’.
Need to re-mortgage another property before buying yours. Some people may say they are cash buyers because they don’t need to sell their own home, but may need to seek finance from elsewhere. This may be completed before the purchase is ready, but they will be reliant on this transaction running smoothly.
How can you check they are cash buyers?
You are within your rights to ask the estate agent to request sight of a bank statement from the buyer, showing they have the funds in order to complete the purchase of your property.
Whilst you cannot confirm the specific intent of the buyer, the buyer having funds in an account shows they have the money, whereas someone who is reliant on a sale is less likely to have the funds available in their account.
Benefits of a cash buyer
There are some benefits that could be had through having a cash buyer. The fact they will not be having a mortgage could remove some hurdles in the process.
However, it would be within your rights to confirm whether the buyer will be carrying out searches on the property. Throughout the Covid-19 pandemic local searches are taking much longer than usual, though we expect this to come back to normal in time.
If a buyer is having a full set of searches this will take at least 2 weeks’ for the results to come back and the solicitor to review them, during which time a mortgage offer could also be obtained in any event. So look out for any buyer carrying out searches. Searches in some areas of the country, particularly in London, can take 5+ weeks to be returned so any benefit of a cash buyer would not be valuable.
Always ask the agent to dig a little deeper into any cash buyer, if they are a true cash buyer they will have nothing to hide if the agent is to ask for bank statements to confirm the cash is there. Cash buyers may try and negotiate on price ‘for cash’ with promises of a ‘quick sale’ so make sure you are fully aware of the whole situation before agreeing to any price negotiations.