Finding the holy grail of a cash buyer is a goal for many homeowners when selling their property. Whether you are selling your property in Leytonstone, Wanstead, Leyton or Forest Gate, having a purchaser with no chain, no dependant sale, no mortgage process and compete control over their finances and timescale is a real positive for almost everyone, with the conventional wisdom being that a cash buyer will be faster and less hassle. And so it can be.
But not everyone’s idea of a cash buyer is the same. There are sometimes huge differences between what a buyer thinks makes them a cash purchaser, and what a seller thinks.
Technically speaking, being a cash buyer means that you will be buying a property without securing a loan on it. That’s it. You are buying, and you are buying with cash. But there is more to it than that.
There is an expectation from both homeowners and estate agents that anyone saying they are a cash buyer is ‘in funds’ at the moment of making an offer. That means having immediate access to the full amount of money to buy the property, with no dependent sale and no finance being raised against – or dependent on – any asset, person or eventuality.
Buyers, on the other hand, might genuinely see themselves as a cash buyer even if they don’t yet have the funds available. Their expectation of having the money by the time they need to hand it over is enough for them to see their buying position as cash. Some people think that simply having a cash deposit alongside their mortgage makes them a cash buyer. So there is clearly a lot of misunderstanding around the term and that’s why your estate agent needs to ask the right questions. Here are some areas where ‘cash buyers’ may be expecting funds and the questions your estate agent should be asking:
MONEY FROM FRIENDS & FAMILY
If someone is getting money from relatives or friends, it’s important to know if any of those people need to see your property to approve it; if they require a particular sort of survey or valuation; if they need to be involved in the legal process and whether they will be on the title deeds. Any and all of these can have a major impact on the speed and simplicity of a sale.
It’s also possible a buyer’s funds could be coming from an inheritance. Again, it’s important to know whether that procedure is complete, or whether any factors might delay it.
MONEY FROM SAVINGS
Is the buyer’s money readily available right now, or are their funds in an account with a notice period? If they do need to give notice, how much notice do they need to give and when will they be giving it? Will they – and can they – exchange contracts before those funds are released, or will it delay your exchange or completion date? Your buyer – quite understandably – might not want to give 30 days notice and lose all that interest until they have the security of having exchanged contracts, so it’s good to be clear at the outset.
MONEY FROM STOCKS & SHARES
This is very important because the shares your buyer has may be worth one thing today, and something completely different tomorrow. Is their offer dependant on their shares remaining at a certain level, or are they cashing them in now to make sure they have the funds to buy your home?
If somebody is selling a property and has enough equity to buy your home without needing a mortgage, they are technically buying cash. But they may not yet be in a position to buy. Has their sale exchanged contracts? Is their property even on the market? Is it reasonably priced? Has your estate agent spoken to their estate agent about the chances of a sale?
Even if your buyer isn’t selling another property to purchase yours, they may still be reliant on another property to raise funds. Some buyers remortgage their existing home or a rental investment to buy another property, so while they might be buying yours cash, your sale could still hinge on another property and the administrative procedures of a lender.
As you can see, there are many factors to consider when considering whether someone’s offer is genuinely cash. There are also clear differences between what buyers and sellers define as a cash buyer. This is why it’s imperative for your estate agent to ask the right questions, because the answers will help you make an informed decision over whether an offer is as good as it sounds, and whether it’s right for you.
If you’d like to talk about any aspect of buying or selling property in Leytonstone, Wanstead, Leyton or Forest Gate, why not get in touch? We’d love to hear from you.