Why are cash buyers seen as a good thing? Don’t they just have different risks?

[paintedpumpkins]

I don’t get why cash buyers are meant to be a good thing and something to choose over buyers using a mortgage.

We sold and bought recently. Our buyer used a mortgage. I liked knowing she couldn’t try to drop the price at the last minute as it would mean having to get a new mortgage offer, whereas with a cash buyer there’s nothing to stop them screwing around like that so I would’ve felt really uneasy.

I suppose there’s always the risk that someone doesn’t get their mortgage, but is that really likely if they’ve passed all the formal checks?

What am I missing here?!

No chain

And mortgage doesn't stop people acting like dicks, because you don't necessarily need to rearrange the mortgage offer (depending on how much they are putting in themselves from other sources)

A cash buyer doesn't need to sell their existing property (if they have) to raise the money. So it's far less risky.

I think the main plus is no chain, so a cash buyer can do everything as quick as possible. Things are more predictable on a short period.
However Im sure cash buyers can be dicks as well.

No chain, which limits the possibility of it all falling through if another part of the chain fails, much faster, no possibility of the lender’s valuation of the property not agreeing with that of the vendor etc etc.

A cash buyer (and I’ve been one) is in a stronger position. If you can show up, we, say ‘My house is sold, the money is in the bank, and I’m ready to offer X now’, you stand out. Having said that, I’ve used my position as cash buyer to lower the price, too, knowing that I would be regarded more favourably than someone offering more, but subject to mortgage approval, selling their own house etc etc.

Also because if you are a cash buyer the mortgage company can't come and say, sorry, the house isn't worth what you have offered we won't lend you the amount you need. That happened to us when we were buying a house where we had offered 840K and the mortgage company decided it was only worth 795K. We had to either make up the shortfall in cash, get the vendor to accept a lower offer or walk walk away. When you have the full amount in the bank it's just up to you how much you think it's worth.

No chain.

Simpler and more straightforward as fewer people involved in the transaction ie no mortgage company to involve getting a survey, no need to coordinate completion date with funds coming through from mortgage company.

No guarantee when offer is made that the mortgage will be granted. They should have an agreement in principle but it can be lowered once all the paperwork starts

It is so easy. No chain, no mortgage company. When I last bought we were in rental after our buyer wanted a quick return from overseas (and they paid a premium for that!). The only things we had to do were searches and survey.

Our buyers were cash buyers too. The process was soooooo easy.

Cash buyer just means no mortgage, they aren't necessarily chain free. But obviously a lot of people do believe that

No chain, no mortgage, nothing to sell and the money is there in the bank ready to go. So as long as they don’t change their minds or something awful comes up on the survey or searches then it should be a simple and quick sale.

Cash buyer means they don’t need to sell - ie no chain. It doesn’t mean they don’t need a mortgage.

That's not true. A cash buyer is someone who can purchase a property without a mortgage or the need to sell their current home.

OP anyone can drop their price at the last minute, mortgage or not. What you are missing about cash buyers is how much more straightforward the transaction will be without a chain or waiting for mortgage offers etc, it's kind of obvious :)

Mortgage delay, decline or low valuation. But it's good DIPs are being asked for, before viewings.

Of course, I was forgetting about downvaluation.

If you’re using a mortgage, you’re not a cash buyer.

Lots of people call themselves "cash buyers" when they are not (as evidenced by this thread!) a true cash buyer has no property to sell, and has the money sat in the bank.

People who call themselves cash buyers when they will have the cash upon the sale of their property are not cash buyers, and whilst they are slightly quicker in the process than someone with a mortgage it's not a huge difference.

True cash buyers, with the money sat in the bank and no property to sell, will be by far the quickest way to compete the process.

While there may not be mortgage issues going on - cash buyers can faff about the same as other buyers - ours were a world class pain in the arse.

A cash buyer doesn’t have to go through the long process of getting a mortgage in place

I have been through it and I have been on the receiving end of it and it takes months whilst having been a cash buyer and having sold to a cash buyer 4 weeks from offer to completion is what I liked

Risks on both sides.

Risks scale with the number of parties involved. When you sell to someone with a mortgage you are effectively negotiating with 2 parties rather than 1, and more if there is a chain.

Generally with a cash buyer you are negotiating with one.

But I agree that cash buyers and particularly "investors" are more likely to pull out at short notice or engage in last minute negotiation.

Understanding your buyer and the risks they present is important. Getting yourself into a position where you have to move by a certain date and are exposed to the buyer making a transaction is always risky and should be avoided where possible.

I was royally messed about by cash buyers. When you are buying with a mortgage, you have commit to an address to start the process.

For a cash buyer they aren't tied into that process. If a more attractive property comes onto the market they will walk away without a care.