How to negotiate as a cash buyer

[CatsAndZebras]

After 18 months I've finally completed and am in the fortunate position of being a cash buyer. Haven't yet found anything that ticks my boxes but want to get prepared for when I do.

My expectation is that I will have an advantage over buyers in a chain, needing a mortgage, unable to proceed quickly etc. When selling that's the sort of buyer I would have wanted.

My query is how, as a cash buyer, do I negotiate the best price for myself / put my offer forward in the most positive way to the estate agent / vendor?

When you register with agents/ go to view, ensure the agent knows your position. When you make the offer, something to the tune of "This is a cash offer (proof of funds available on request) and I/we do not have a property to sell".

There is always discussion on how much of a "discount" you get for cash. Often it depends on the vendor's own position and whether it's the sort of property that would typically go to a first time buyer anyway (i.e the vendor is reasonably expecting any buyer to be chain free). If it's a high value property where typically there might be a 2/3 party chain below it, that's when being a cash buyer delivers the most benefit to the vendor, as you are reducing the length, and therefore risk, in the chain.

It partly depends on what you’re looking for and where eg if you were to make an offer this week on a flat in London you’d have a big advantage cause so many LLs are selling up before the expected CGT hike on Oct 30th budget. But even with you able to move quickly it’s unlikely you’d complete now before Oct 30th because searches etc take around 6-8.

Beyond that it’s generally a buyers market atm anyway so once you find somewhere you’ll tell them you’re cash + no chain and put in an offer under asking emphasizing you can move quickly and see how it goes. For some sellers it makes a difference but some are absolutely determined on the price and won’t be swayed by you being cash with no chain. Also from your POV you should make sure you don’t end up with slow sellers so you could make your offer conditional on completing by a certain date.

We’re cash and chain free and currently stuck in a situation where the sellers are being unbelievably slow and still wanting more time so we may pull out.

Go for auctions.

We gave the agent proof of funds then got him to put forward the offer, it is not up to you to negotiate, leave it to the agent, they have an obligation to put forward all offers.

Cash is king!

Good luck.

You're in a good position, but my advice is don't play games!

I've just sold a probate property.
We priced to sell, it was on for 10k less than 2 similar houses in same street, because they were over priced.

FTB offered us 15k under asking and when we rejected that they went up by 5k. We said still too low as the house was on for a sensible price. FTB said that was absolutely their max with no room to negotiate.

On the same day we had an offer by a buyer in a chain, of the full price.

The agent told the FTB about this offer, and suddenly they could afford the asking price!
We went with the person in the chain because they seemed far more genuine. My guess is if we'd gone with the FTB they would have used some other excuse to get the price down later.

Be genuine!

There are stories of cash buyers having an unbearable sense of entitlement, so don't be surprised if some sellers and EA's aren't as impressed as you might hope.

Load up the property log extension on Chrome and view all the movements for each Rightmove advertised property. Maybe there is a sweet spot where cash buyers become more attractive - after, say, 3 months.

When I bought some property in the US. I found one that was reasonably priced but had been on for over 3 months. I didn't care whether I secured it or not. I offered 20% less as a starting position but just got accepted straight off. I'm not suggesting that would work in the UK market where there is more emotional attachment to property.

Ultimately, offer what the property is worth to you and which you are comfortable paying. That could be 20% more than is being asked or 20% less (or any other numbers!).

It depends if they are in a hurry to complete. Looking at it the other way round, when you sold your house how much discount would you have given to a cash buyer?

I was in the same position as you a few years ago, and I was buying in a very competitive market, I had already missed out on a couple of houses. I think being ready to go gave me an advantage over other potential buyers but I don’t think I got any discount.

I don’t think you always get a discount as a cash buyer although it may be different in a buyers market. In a sellers market I think you just get ahead of everyone else when viewing houses, therefore no discount. It seems to me in the South East that there are always cash buyers around.

Some really helpful suggestions here - thanks.

BooToYouHalloween I'm looking at properties around £450k so think we'll placed. Hadn't considered vendors slowing down proceedings.

And be genuine and lose my unbearable sense of entitlement. Difficult as when the time comes I think I'll feel totally justified in making substantially low offers.

IME being chain-free is more important than where your money is coming from.

Also IME cash buyers were a total PITA.

Interestingly when we were selling our estate agent told me that sometimes buyers with mortgages are preferable because they’re less likely to pull out at the last minute or try and drop the price (because their mortgage has tied them to the place somewhat and they wouldn’t want to start again somewhere else) so it has its drawbacks too.

The only thing to do is present your position as you've presented it here. .

However I think your likelihood of success depends on the sellers situation regardless.
We've just sold and needed asking price to be able to afford our onward purchase. So we'd have said no to a lower offer on that basis

You’re definitely justified in making very low offers. But so are the property owners justified in rejecting them unless they are desperate to sell quickly.

If I was selling at the moment I would have a small preference for a cash buyer. But not enough of one that I would accept a substantially lower offer than I could get from someone else.

We just bought a house recently as cash buyers. TBH it made more of a difference that we were ready to go but not tied to a chain than how we were financing things. I think it can give you an advantage if the vendors have multiple offers but not sure it would make enough difference for a substantial discount. That would more likely depend on specific circumstances/local market.

I already think you might struggle if your going in attitude is that you can make substantially low offers, and automatically expect them to be take seriously. The trick to a successful negotiation is to work out what the other party values. It may be that time is more important to them than price, in which case you will be well placed. If it isn't, you won't.

What being a cash and chain free buyer gives you, are two very strong points which should make you more favourable than other interested parties. It doesn't necessarily mean you will get a low offer accepted.

Difficult as when the time comes I think I'll feel totally justified in making substantially low offers

What's the main reason that you feel that way?

Isn’t the OP requesting a discount for offering speed and no complications her side?

To a certain extent I don't think it matters if you are a cash buyer or not. We have a cash buyer for ours but we are not cash buyers for our onward purchase so the overall transaction time won't be increased by our buyers position, as we still have to arrange our own mortgage etc. We were not in a position to accept a low ball offer because we need to have enough equity to also move. Luckily for us, our buyer made a sound offer straight off. As much as it's a positive to be a cash buyer, it's not the only deciding factor for people.

Personal preference here, but I would actually be more wary of a cash or FT buyer. I think that with these two groups there is more likely to be negotiations around price and potentially more chance of them pulling out last-minute or trying to wangle an 11th hour discount.

XVGN · 16/09/2024 09:08

There are stories of cash buyers having an unbearable sense of entitlement, so don't be surprised if some sellers and EA's aren't as impressed as you might hope.

This, absolutely. You'll probably find the estate agent will push any offers you make to the seller quite strongly anyway (that was certainly the case when we were last selling) so I don't think you need to do much more than that.
In our case, our estate agent pushed the cash buyers case so strongly that we took the estate agents advice, and accepted their offer against our gut feeling. These buyers wanted the moon on a stick! We had priced the property incredibly fairly, and we were motivated sellers, as we'd seen a property we liked. However these cash buyers were sort of expecting the impossible in terms of timescales, etc. We ended up selling to a motivated first time buyer who had fallen in love with the house, and whose offer we had initially rejected in favour of the cash buyer. He was organised, didn't play games, and had a mortgage offer already in place. We figured by the time all the searches and legal stuff had gone through it wouldn't speed things up by selling to the cash buyer anyway. This experience would actually make me fairly wary of cash buyers in the future. So as @AgreeableDragon says, don't play games! You're already in a strong position, trying to 'game' the system could actually work against you.