Do Cash Buyers Offer Less?

If you’re in the process of selling your house, you may have been approached by a cash buyer.

With a lot of money in the bank, such buyers or professional companies like ourselves are in a better position relative to the “average” homebuyer looking to finance the property via a mortgage.

As a result, although there is almost always a buyer for any property, the offer you’ll receive may well be less than the market value.

In this article, explore why this happens and whether it’s worth considering a lower offer on your property from a cash buyer?

What is a Property Cash Buyer?

A “cash buyer” is very much what it sounds like…

The property is sold outright for the full amount agreed between the buyer and seller.  Subject to the relevant legal checks, the buyer will be able to hand over the funds then and there.

On the other hand, a buyer purchasing with a mortgage has to jump through a number of hoops before the lender will advance the funding.  This, in reality, can take many months.

Cash buyers have all of the funds they need to hand in order to purchase the property and a lot of hassles are therefore avoided.

Why Do Home Sellers Accept Lower Offers from Cash Buyers?

There are specific reasons why many homeowners are willing to sell to cash buyers for a little less.

Firstly, a cash sale is less likely to fall through than a mortgage sale.

It may come as no surprise that 1 in 3 house sales collapse across the UK.  Buyers who rely on mortgages may fail to meet all of the conditions put forward by their lenders. In this instance, their mortgage lender may reject their application – forcing them to withdraw from the process. Other times, the mortgage company’s instructed surveyor down values the property.

Sales of this kind are quicker too. This is because cash buyers who already have the funds “in hand” won’t need to wait until they have sold another property before they can afford yours.

For this reason, there will be no chain – and they’re likely to be able to take over ownership in much shorter timeframes.  You’ll therefore save on ongoing mortgage / insurance payments, bills and other “overheads”.

Cash buyers are generally more willing to take on risks that the average homebuyer wouldn’t.  There are also properties that can only be sold to cash buyers only due to a range of physical or legal issues, that effectively make them unmortgageable.

Finally, cash buying companies like Property Solvers cover all legal fees.  As it’s a direct sale, there will be no estate agency fees.

You’ll often find cash buyers at auction houses up and down the country. With specific deadlines and requirements that provide greater seller security, such buyers often aim to pay less than the market value.

On balance, then, a seller may decide that taking a slight hit in terms of their asking price is worth the reduction in stress, risk and waiting time.

Why Do Cash Buyers Make Lower Offers?

It’s not always the case that a cash buyer will attempt to offer you less than your expected asking price. However, it is more common for a buyer to do so if they have direct access to funds than if they were relying on a mortgage.

There are numerous reasons why this may happen. The first is that the buyer is likely aware that many homeowners find a cash sale more appealing than one that requires a mortgage.

Another major reason is that, because they have access to a finite sum, many buyers will be keen to hold on to as much as they can for any renovations or unexpected costs. Mortgage buyers only need to come up with 10% (or even less) of the final sale amount in order to pay a deposit. This means they can borrow far beyond the amount they actually have “in hand”.

Should You Accept a Lower Offer from a Cash House Buyer?

An offer that is lower than your asking price may not seem very appealing at first glance. However, much will depend on your own objectives.

For instance, if you’re not in any particular rush and your estate agent has fully vetted the buyer, it makes sense to hold out and maximise the price you achieve.

If you simply want to avoid being exposed to the whims of the buyer’s chosen mortgage company, dealing with a cash buyer may be a viable option.

Remember also that in some cases you may even be able to achieve the full market value from a cash buyer.  At our auctions, particularly for properties in high demand, competitive bidding can sometimes drive prices way beyond the initial guide price.

Property Solvers – A Leading Cash Buying Company

Property Solvers can make an upfront cash offer for your property worth up to 75% of its fair market value. If you’re happy to accept, we can close the sale in seven days (with exchange of contracts in 48 hours should it be required).

You can rely on us not to drop out of the sale – and you won’t have to pay any estate agency charges or solicitors’ fees.

To learn more about these services or if you would simply like some no-obligation guidance, simply contact us today. We will be very happy to provide any assistance you may need.