Cash Buyers Only – What Does it Mean?

Selling your house can be an exciting time. You could be moving to your dream home, or relocating to be closer to family and friends. If you’re on the hunt for a property, you’ve likely seen properties advertised for cash buyers only. But why would this be the case?

28th June, 2022

Selling your house can be an exciting time. You could be moving to your dream home, or relocating to be closer to family and friends. If you’re on the hunt for a property, you’ve likely seen properties advertised for cash buyers only. But why would this be the case? 

Selling a house comes with its stresses and pitfalls. Cash property sales tend to be faster and more reliable than sales to mortgage buyers. In this article, we’ll give you everything you need to know about sales that are advertised as cash buyers only. We’ll cover what it means, and why sellers might prefer selling to a cash buyer. We’ll also take a look at some of the pros and cons of being a cash buyer and discuss some of the potential risks and how to avoid them. 

If you want to find out something in particular, such as why a house would be listed as cash buyers only, then use the menu below to skip through the article quickly. Otherwise, read on for the full-fat guide!

What does cash buyers only mean? 

If a property is advertised as ‘cash buyers only’ then it means that the seller only wants offers from prospective buyers who have the funds to purchase their property without taking any loan. The funds must be available immediately and the buyer can’t be waiting to receive funds from the sale of their current property. 

If an offer is submitted on a ‘cash buyers only’ property it will usually need to be accompanied by proof of funds. This is typically a bank statement showing that the entire amount is currently available. The buyer’s solicitor will perform Anti Money Laundering checks to ensure that this money is coming from legitimate sources. 

It is also possible for the funds to take the form of a cash gift. It must be proven that the funds will be coming directly from the buyer’s account. Sales of houses to cash buyers are more common than you’d think. In 2019 around 28% of UK property sales were to cash buyers. 

 

What is a cash buyer? 

A cash buyer is a person who doesn’t need to use a mortgage or loan of any kind to purchase a property. They will use their own funds (or a cash gift, possibly from a family member) to purchase the property. 

Despite the misleading term, being a cash buyer doesn’t mean that the purchase is completed with physical cash. Most solicitors would run a mile if you showed up to their office with hundreds of thousands of pounds in a briefcase! Cash buyers typically purchase properties with funds that are immediately available in their current account.
 

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Do sellers prefer cash buyers? 

In general, sellers prefer to sell their house to a cash buyer rather than one who requires a mortgage or who is in a chain. There are a few reasons for this. We’ve discussed some of the most important ones below. 

  • Speed. Cash buyers can be attractive to sellers who are trying to sell their house fast as they won’t have to go through the process of a mortgage application. This also speeds up the conveyancing process. 
  • Sale is less likely to fall through. Cash buyers aren’t part of a property chain. Government statistics suggest that around 1 in 3 property chains break. Having a sale fall through can be incredibly stressful for a seller. Particularly if they’re relying on the funds of their sale to complete their onward purchase. Cash buyers don’t need to sell their own property to complete the purchase, so the sale is much more secure. 
  • Reduced stress. Selling on the open market comes with its pitfalls. Marketing the property, conducting viewings and negotiating offers can become stressful. Selling to a cash-buying company means that you don’t have to go through the usual rigmarole associated with selling your property on the open market. Particularly if you sell your property to a cash house buyer like SmoothSale. 
  • No mortgage. Mortgage offers are always subject to a homebuyers survey. These can sometimes come back and value the property at a lower price than the offer amount. This leads to a reduction in the mortgage offer and often causes the sale to fall through. As cash buyers aren’t relying on a mortgage, this is a big positive for sellers. 

There are lots of reasons why sellers would prefer to sell to a cash buyer. But are there any pitfalls? The main one is that cash buyers are tying up a lot of capital at once and so will usually expect a discount in the purchase price. Many sellers are prepared to give a discount for the ease and security associated with selling to a cash buyer. In fact, they’ve likely already made this trade-off when they come to listing their property as cash buyers only. 

 

Why would a house be cash buyers only? 

A seller may list a house as ‘cash buyers only’ simply because they want to sell their house fast, or there may be more critical underlying issues with the property that make it unmortgageable. We’ve outlined some of the top reasons that someone may list a property as ‘cash buyers only’ below. 

Structural Issues 

Some structural issues (such as subsidence, Japanese knotweed, or roof damage) stop lenders from offering a mortgage on a property. They would usually be surfaced on a homebuyers report (a survey commissioned by the lender) or a structural survey if the buyer chooses to carry one out, and would typically cause a down-valuation. This could mean that the sale falls through because the prospective buyer no longer has the funds. 

Repossession

Repossession is a common reason that a seller would list their house as ‘cash buyers only’. Cash buyers are typically able to complete the purchase of a property quicker than a mortgage buyer. This is great for people who are trying to sell their house fast due to repossession. It means that they should be able to pay off the lender more quickly, reducing their risk of being made homeless.  

Location 

Location can be a factor in determining whether or not a seller will choose to list their property as open to cash buyers only. If their house is located in a particularly undesirable, or dangerous location, lenders may refuse to offer a mortgage on the property. Listing the property as cash buyers only prevents sales from falling through as a result of mortgage offers being declined. 

Property Chains

Cash buyers tend not to be reliant on a chain to complete their purchases. They aren’t depending on the money from the sale of a property to be able to purchase the property. They’re therefore seen as more secure as they’re less susceptible to chain breakage and therefore failed sales. This is seen as favourable by sellers because the sale is less likely to fall through and they’re less likely to have a long, drawn-out, process. 

Speed of Sale

We’ve mentioned this before, but cash buyers can complete the purchase of a property more quickly as they don’t go through the process of obtaining a mortgage. This is attractive to some sellers who need a quick sale, so may lead to them listing the property as ‘cash buyers only’. 

Why would a house be cash buyers only

Is it risky to be a cash buyer? 

Buying a property with a mortgage is sometimes seen as safer than cash because mortgage providers insist on certain checks before they will lend on a property. There are ways that you can mitigate those risks though, by performing some of the same checks yourself. The most important ones are below. 

  • Find out the situation of the seller and why they’re marketing the property to cash buyers only. 
  • Conduct property searches to make sure you won’t come up against any nasty surprises after you purchase the property, such as a development being built next door or a mine shaft under the house!
  • Carry out a structural survey to make sure that there are no fundamental issues with the property.

 

Conclusion – how quickly can I sell my house for cash? 

In this article, we’ve given you the download on properties that are listed as ‘cash buyers only’. We’ve explained what it means, and answered the question: what is a cash buyer? We’ve also covered some of the main reasons that sellers prefer cash buyers. These include speed, security, reduced stress, and reduced uncertainty surrounding mortgage applications. We explained some of the main reasons why a property is cash buyers only. These are typically to do with repossession, property chains, the speed of the sale, or structural issues. Finally, we explained why buying as a cash buyer can be riskier than with a mortgage, and we covered some of the things you can do to mitigate those risks. 

Selling your house to a cash buyer can mean that you end up with a quicker sale. However, by appealing to cash buyers only, the pool of prospective buyers is reduced. If you’re looking for a truly quick sale of your property then consider a cash house buyer like SmoothSale. We buy any house in any condition, and we can complete a purchase within 7 days. The best part? Our service is completely free, we even cover your legal expenses. Why not give us a call today on 0800 368 8952 and find out more? 

 

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