What are the advantages of being a cash buyer?

[Awholelottanosy]

Due to an inheritance, and moving to a cheaper part of the UK, I may be in the position of being able to buy a two bedroom house or flat outright. I've never bought before, just paid expensive rent in London so have no experience of house buying. Just wanted to know, if you are a cash buyer, does that give you any advantages in terms of both having the finances and not being part of a chain and if so, does that mean you can negotiate for a lower price?

Yes, yes and yes!

Yes yes and maybe

I think it's a particular advantage if you're not in a rush to buy, especially if you're not particularly fussy either (ie not looking for a very individual special house). Both times we've bought we've been cash buyers and also renting so happy to take our time, look around, and wait for something to come up where the sellers are wanting cash quick.

It also gives you more freedom regarding what you can buy - eg. you could buy something at auction that is technically unmortgageable (but easily rectified) and potentially get a bargain. Good luck.

Sometimes people fear cash buyers will drop the price before exchange as not tied into agreed amount re mortgage (we had trouble selling a family member's house as was messed around by cash buyers).

We were FTB no chain and it meant nothing where we are (Essex) property moves too well and most expect selling to take a while. Unless you're somewhere that propert isn't selling well I wouldn't think it would help greatly.

Ha, even a mortgaged buyer can drop the price before exchange, because there's always a cash element in the form of deposit/equity etc.

It's an excellent position to be in though, make sure you get a good deal, look for a stressed seller who needs to sell quick.

in theory it means you can be quick and are uncomplicated.
In reality most sellers dont care, they just want £££s

Thanks all! How would I find out if someone wants to sell quickly?

The definition of a cash buyer is often misunderstood, apparently.
It is only a buyer who has the cash to buy the property in an immediately accessible bank account. Not in the form of a mortgage or after they sell their house or in stocks shares or a notice account.

How would I find out if someone wants to sell quickly?

Price reductions
Listed with multiple agents (possibly)
Says so in listing description
Estate agent tells you on the QT
Check previous price paid/year - are they in negative equity/worth less than they paid/can longer afford mortgage?
Body language/what they say, if they are doing the viewing.
'Sealed bids' by a deadline date.
At auction, or hinting at auction sale.

Of course a buyer with a mortgage can drop the price but it's considerably more difficult to arrange.

Say you are buying 200K property with 10% deposit. If you suddenly reduce offer to 195K you can't still use the 180K from the lender and reduce your 20K by 5K because the LTV is off and the lender/solicitor won't have it.

If you were then going to get the lender to reduce their contribution in any way you would have to get your offer re issued. That takes time, and usually people selling houses don't like to hang around if they're being screwed over.

Cash buyers don't have to answer to a lender. Just like if you need a mortgage your solicitor is representing the lender's interests as well as yours, so it is more difficult to mess people around later in the day.

That only applies if you were right up to the Max ltv in the first place. If you were using an 80% max mortgage and your original offer was just over 70%, you have some room for manouvre without having to alter the mortgage offer. They only care that you are within the limit, not the exact amount.

Not everyone (a minority only, I would say) choose have such manoeuvrability as opposed to edging into the lowest bracket possible.

I still maintain that it is more difficult with a mortgage to faff around with price in the build up to exchange. Plus, if the vendor calls your bluff and you walk away you need to re apply with new property, more to redo than for a cash buyer = still more difficult.

As I said we were messed around horrifically by more than one cash buyer. We did sell to another, but were fraught with worry in the build up to exchange as a result of the previous two.

I would be more interested if someone could move fast, but then people have very different definitions of what fast is.