What is a "Cash Buyer"?

We’re looking around at quite a lot of houses at the moment and I’m really enjoying the fact that the house prices keep dropping as it can only leave a buyer in a better position.

However, on a property we were interested in recently and placed a reasonable bid on, it went Sale Agreed to a cash buyer who had bid less than us (and at least one other party). To be fair, he’d already had the survey completed and they were clearly looking to close quickly. However, I’m still fascinated - what’s the definition of a cash buyer?

Is it one without a mortgage?
Is it one who can write a cheque there and then?

I’ve seen them mentioned quite a bit on the pin, but don’t understand makes up a cash buyer.


Someone who doesnt need a mortgage.

I dont think they are writing a cheque there and then though.

Someone who does not need a mortgage to fulfill the purchase.

Not subject to finance, not in chain - has dry cash for the full purchase amount.

As prices drop there are an increasing number of cash buyers.

Also my experience is those with the cash are not as inclinded to leverage up the ladder as much - some are very happy to buy within their means and carry on saving - for some interest is to be avoided at all costs.

Thats usually how they come to have the cash in the first place!

A cash buyer doesn’t need a mortgage to purchase the house as he or she has the full amount at their disposal already - in bank accounts, post office accounts, etc.

I would. Once I’d surveyed the house thoroughly, if it was worth purchasing for a price in mind, and say there was a higher bid on it, I’d say, “Well I’ll give you X amount for it right here, right now.”

So you’d hand over your cash/cheque that day but you’d have nothing to show for it until the title transfer takes place several days or weeks later. You’d be taking the risk that the seller actually has clear title to the house and that the title can be conveyed. What if the seller is deep in negative equity and they abscond with your cash? Would seem a foolish thing to do in the extreme.

and in several months be posting the disastrous tale on AAM…

I assume the same process would be followed as in any other sale. Booking deposit, contracts to solicitors etc, evidence that the cash is actually available… and once all the legalities are completed, a cash transfer would happen. The only thing missing from the process would be letters from the mortgage provider advising that mortgage approval is in place…

In the present climate a cash transaction can in practice be completed much more quickly than one involving a mortgage. Typical drawdown periods for already-approved mortgages have become very long, so the vendor may have to wait several weeks or months after the normal title issues could have been cleared up. Throughout all that time the vendor is exposed to market risk (with prices going down) as long as there any chance that the bank does not issue the cheque. And until quite late in the drawdown process, that chance of not getting all the funds is still present: the bank uncovers something that had previously not come to light, or the buyer is unable to provide all of the paperwork required as a condition of drawdown, and so on.

If available, a cash buyer is a far more attractive proposition to a vendor than mortgaged one, and vendors would be perfectly reasonable to accept a lower bid if it was purely cash.

Of course. The point being made is that I would look on it as a device to strengthen my hand against other bidders. Going into the whole process, well sure, solicitors would be involved, payments could be kept in escrow, or whatever is decided upon. But, the above is the essential message communicated to the seller. Let him or her know, “I’ve made a proper judgement on the valuation, thoroughly checked it, and here’s the money. You don’t have to run the risk that the other bidders banks valuer will decide there is a problem with something or other. Or that their bank revises their mortgage approval due to one thing or another. How much is that worth to you…”

That is backtracking somewhat from the fatboyslim position…right here, right now.

You say *“I’m a cash buyer, the sale will close when the solicitors do their jobs and is not dependant on any outside factors.”

Now… what’s that peace of mind worth to you?*

the fatboyslim position…hmm that sounds a bit rude…

Anyway, the thought strikes me reading this that perhaps a lot of people out there are cash buyers not because they want to be, but because they cant get a mortgage.

Back in the day, the LTV mattered to the bank because they thought if all came to all they could repossess you and sell your house.

Now we know that banks CANT repossess you.

Now if you have a buyer who
(i) wants to move house
(ii) has negative equity of €100k where he lives
(iii) has savings of €300k (not implausible for a working couple say in their early 40s)

They might buy a damn site better house than the one they are in for €300k. They would get an even better house for €400k. But the bank wont give them a mortgage for €100k on a house worth €400k. The reason being that the LTV is irrelevant; the bank only cares about having certainty that the mortgage can be paid back. Because they cant repossess (govt policy). And if this couple are running two mortgages, then the bank doesnt have that certainty.

I would say I was a cash buyer, proceeds from sale of old house came in in the morning and together with part of our savings made up the purchase price of the new house, which was transfered and the purchase of our current house was finalised that evening. The positive thing from the sellers point of view when negotiating with us was that there was no chain and no issue of mortgage approval. From our perspective we were able to negotiate by waving “guaranteed” money under the sellers nose

I don’t think you would have been considered a “cash buyer” – you were in a chain by the sounds of it. You did not have the cash at the time you made the offer, and the money was not “guaranteed” by any means. If the sale of your old house had not concluded on that day for any reason, you would not have had the money to purchase the new house.

Money from the sale was effectively in a holding account to be released on finalisation of sale figure for new house, once that was done press a button they came in and heah presto you have yourself a sale. Nothing concentrates the mind of a seller as much as seeing an account with money in it, and knowing that you can get this plus more IF you play ball and meet me, the buyer half way and all at the press of a button and signing a few documents.

+1 nothing focuses the mind more than the prospect of real money!