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Home > News > Property Cash Buyer Pros and Cons | Plaza Estates London

Property Cash Buyer - Advantages and Disadvantages of Buying/Selling House with Cash in the UK

By Fraser Gregory  //  Mon 6th July 2020
Moving house is the third most stressful thing a person will experience in their lives. The other two, we are told, are divorce and the death of a spouse.
Property Cash Buyer - Pros and Cons - Plaza Estates
Moving house is the third most stressful thing a person will experience in their lives. The other two, we are told, are divorce and the death of a spouse.

However, those who have moved house will probably tell you that the actual act of moving the physical transportation of all your worldly possessions from the old house to the new home is not the most stressful part of the procedure. Most of the stress comes from the uncertainty and risk that the process could fall through, mounting costs and the rigmarole of arranging loans and paperwork.

Some believe the way to avoid most of this stress is to sell a home to a cash buyer. They believe this might eliminate many of the obstacles that cause much of this stress.

What is a cash buyer

Buying a house with cash means buying a home without the help of a mortgage or loan. The definition of a cash buyer is often misunderstood – a cash buyer must have the cash available at the time of putting in an offer. As a result, to be a cash buyer, you must be able to afford the new property without relying on the money from selling your old one.

The advantages:

Whether you are a buyer or seller, there are several reasons why cash transactions can be advantageous.

  • The sale is less likely to fall through

    The buyer will not be looking to arrange a mortgage, which eliminates the worry that they will be unable to raise the necessary funds causing the deal to fall through at the first hurdle. Roughly a third of collapsed sales occurred as a result of the buyer’s finances not being in order.
  • There is no complicated house chain

    The buyer will not be part of a chain as they do not have to wait until someone has bought their property. This means that there is less danger of the deal collapsing at any time during the selling process.
  • The process is much faster

    A cash sale releases funds to the seller very quickly, and the sale can go through in a matter of weeks. If a buyer needs to arrange a mortgage, this can take around one month from the initial application.

  • There is more security

    A cash buyer will own the property outright and so does not need to worry that their home could be repossessed if they were to get into financial difficultly that left them unable to meet their mortgage payments.


The disadvantages:

It would be foolish to deny that, in certain circumstances, selling a home to a cash buyer would be a good idea. However, like all things in life, there can be pitfalls in selling for cash.

  • Cash offers are often less

    Cash is king, and many genuine cash buyers believe this gives them the power to demand a discount on the asking price.
  • Cash sales can still fall through

    It is true that a cash buyer will not require a loan and will not be part of a chain, and this may reduce the risk of the sale falling through. However, there is still the possibility that buyer has a change of heart at the last minute and pulls out of the deal.
  • There could be something wrong with the property

    When a property is advertised as “cash buyers only” it could be because the seller needs to release the funds quickly. For instance, they may be in arrears and facing repossession, or need to relocate to another area for work purposes, or other personal reasons. However, it could be that the seller suspects that the property is unmortgageable and hopes to avoid a home survey which would be required by a mortgage lender.
  • Loss of liquidity

    As a cash buyer you will be tying up a huge amount of your money in bricks and mortar. While this may be a great financial move, you need to be sure that you will not need to access the cash.


What is the process for buying a house with cash

The process for buying a house in cash is very similar to any property purchase except that you will not need to arrange a mortgage.

Mortgage lenders perform many checks before they lend someone the money for a house. As a cash buyer, you should do the same.

Check property searches

A mortgage lender will carry out several searches, including a Local Area Search, Regulated Drainage and Water Search and Land Registry Title Plan. Your conveyancing solicitor will probably check these, but be sure to check with them and ensure you understand the results.

Get a survey

Mortgage lenders require a mortgage valuation survey before approving the loan. As a cash buyer you will not need this. Opting not to get a survey done might seem like a money saver, but it could end up being a costly mistake. Fixing structural issues like subsidence can cost a large amount of money, flagging issues before the exchange of contracts may mean you can reduce the purchase price of the property to compensate for them. You may also decide not to go ahead with the sale.

Is there another way to avoid the stress of selling a house?

Yes. Take expert advice. Professional guidance and support can relieve the stress of selling a property, even if it is a cash sale.

Although many cash buyers are genuine buyers looking to buy a new home for themselves and their families, quite a few are companies and investors looking for a quick sale and bargains. Cash is king, and many genuine cash buyers believe this gives them the power to demand a discount on the asking price - a discount which often exceeds what an estate agent will charge.

At Plaza Estates, we are able to act as a go-between for the seller and buyer, forging an agreement that suits both parties, negotiating with the cash buyer on the seller's behalf.

Having a cash buyer can alleviate some of the stress of moving house, but there are many situations which can arise where you may need our help and guidance. Contact us today and find out how we can help you.

Offices at

Marble Arch
29 Edgware Road
London
W2 2JE
f: 020-7258-3090
Knightsbridge
34 Beauchamp Place
London
SW3 1NU
f: 020-7581-7005