What is a Fair Cash Offer on a House?

One negative aspect of selling your house for cash is that you are likely to receive a lower offer than would be the case with a mortgage buyer.

Nonetheless, on balance, many sellers are happy to proceed with a cash offer in exchange for an easy and speedy transaction.

But how do you know what a fair offer actually is and how much under the market value should you accept?

In this article, the We Buy Any Home team at Property Solvers explore these questions…

How to Define a Fair Cash Offer for a Property as a Seller

What defines a fair cash price is often subjective and will depend on your own aims as a seller.

For instance, you may simply want the property off your hands and not want to deal with the hassles of a buyer that’s financing the purchase with a mortgage.

When using Property Solvers, as well as benefitting from an accelerated sale and guaranteed cash at the end of the process, you’ll save thousands on estate agency and solicitor fees.  You’ll also avoid the ongoing holding costs – such as mortgage payments, insurance, household bills and other overheads.  What’s more, with us, the chances of a cash sale falling through are zero.

On the other hand, it’s completely understandable if you want to play the patience game and maximise the price you get your property.  After all, your house is often the most expensive item you possess.  It makes sense to want to get the most amount of money – despite all the twists and turns that can happen when selling on the open market.

Much will also depend on what you believe the market value is.  Here, it’s important to do your own research (using freely available HM Land Registry data).  This is also known as due diligence.

Remember that estate agents frequently tend to over-egg their estimations to lure business.  Once you’ve checked things for yourself, you may see that the cash offer may be reasonable enough for you to accept.

What Do Buyers Feel a Fair Cash Offer May Be?

The size of the offer a cash buyer may make depends on a number of factors. We explore a few below:

The Market

If the property industry is currently experiencing a seller’s market, even cash buyers may be willing to edge up their offers due to the limited availability of properties.

Conversely, in a buyer’s market – when supply is high and demand low – you may find yourself less in the driving seat and be willing to accept a reduced offer (rather than no offer at all).

In a market of this nature, a cash buyer may find themselves able to offer 20 to 25% less than the original asking price. It may be even lower if, for instance, there’s a strong risk that house prices could fall.

The Property’s Condition

If your house needs a good amount of work or modernisation, a cash buyer may offer a sizeable amount less than you are asking.

After all, they will need to factor the required repairs and upgrades into their budget – not to mention the time and effort required to bring the property back up to scratch.

The Prices of Surrounding Properties

Nearby homes of a similar size and layout may have recently sold far lower than your asking price.

In that case, it could be argued that you have overpriced your own property. To this end, you may receive offers closer to the amount achieved by the other sales.

As mentioned above, it’s crucial for you to undertake your own checks on the local property market prices.  These days, it’s never been easier to check HM Land Registry “sold house prices” for free online.

The Length of Time the Property Has Been on the Market

If your property has been languishing on the market for several months, a buyer may have reason to believe that you’re very keen to sell – even for a low price.

If you have already dropped your asking price at least once, this could be considered further evidence.

Physical or Legal Issues with the Property

These appear during the conveyancing and survey process and may end up affecting what a cash buyer is willing to pay.

Much will depend on how serious the problem appears to be and whether you’re willing to deal with issue yourself or accept a discount to account for the remediation cost.

How Do You Get a “Fair Cash Offer” From a Buyer?

Even though cash buyers have the money to buy your property outright, this doesn’t mean they’re going to be less discerning about what they’re willing to pay.

Many may be weighing up their options about other ways their money could be put to use.  The stock market, index funds, corporate / public bonds or simply a savings account may be better options.

You’ll be aware that owning property is not cheap and the buyer will also have Stamp Duty to pay which needs to be taken into account (this will be higher if it’s a second / investment property).

If a buyer is only seeking a discount due to the comparative ease of a cash sale, you might expect them to offer between 5 and 10% lower than the original asking price. However, cash offers at 15-30% are common.

Your Options…

Cash Offers Through Estate Agents

Generally speaking, cash offers that come through from estate agents tend to be higher.  However, in this scenario, be sure to check the buyer’s credentials.  Some outline questions to ask include:

• Can they show proof of funds?
• Has the estate agent undertaken the correct checks?
• Who is the solicitor and are they registered with the Law Society and or Solicitors Regulation Authority?
• When can the buyer complete the sale and are they willing to pay a holding deposit?
• How can they demonstrate they will not gazunder the sale (i.e. drop the price at the last minute)?

Cash Offers Through Auctions

Cash buyers at auction are typically willing to pay between 75 and 100% of the value – depending on the desirability of the property and the market in general.

The benefit of selling through this channel is the extra security you get – particularly as exchange of contracts happens once the hammer falls (with traditional or unconditional auctions).

At Property Solvers Auctions, we’ve been able to get to this point within a week of instruction.

Cash Offers Through A Property Buying Company

By far, the quickest and best way to find a legitimate cash offer is to sell directly to a fast home buying company like Property Solvers.

We’ll make you a no-obligation cash offer upfront. The amount we offer could be up to 75% of your property’s market value (often more). We can also complete the sale in as few as seven days.  You also won’t have any estate agent or solicitor’s fees to pay.