How To Know If Buying With Cash Is Right For You

Banknotes on White Surface

If you’re in the market for a property, whether you’re looking to buy a home where you can live or you’re looking for an investment opportunity, you may be considering an alternative to today’s messy mortgage market – becoming a cash buyer. You may see quite a bit of advertising of homes that say things like “cash buyers only” meaning those who are buying without the assistance of a lending company are the only ones who can make a bid on a home, too. What are the benefits of joining other cash house buyers? How do you even begin to join other cash buyers-only bidders? This quick guide will help you answer all of your questions.

What Is A Cash Buyer?

It may help to start with a definition because understanding the answer to “What do cash buyers only mean” as you begin to see those advertisements can help you get on the right path from the start. House buyers, in the UK and elsewhere, really only have two choices when they buy a property. They can work with a lending company to get the cash they need. These companies are usually banks, and they typically offer the money in the form of a mortgage. This is the way most people attract buyers for the property. Although it’s such a common way to buy a property, it’s not without its obstacles. It can take quite a bit of time to buy a home in this manner, as there are many different checks and processes a mortgage company must go through before they’ll issue the loan. Here’s a quick overview of how the process works if you’re unfamiliar with it.

  • Once a buyer finds a property they like, they put in an application for the mortgage. Along with the application, they typically have to offer proof of their income and ability to repay that mortgage. They usually do this with payslips, bank statements, and details of other kinds of investments. This tends to be a bit harder for those who are self-employed, as they usually must provide a tax return and some details about their accounts for the last few years. In addition to documentation about how much money they make, they also usually provide proof of identity and where they live now.
  • At that point, the mortgage application goes to an underwriter who begins to look through the applicant’s financial history and a team that begins to look into the property in question. Usually, the lender does a valuation on the potential property to confirm that it is worth what the person is hoping to pay for it.
  • If the checks against the applicant’s credit and those against the house come back okay, the lender provides a formal mortgage offer. These offers typically last six months, and they can be processed about four weeks after the offer is received.

A mortgage, though, isn’t the only way to buy a house. The other option is to become a cash house buyer. This type of buyer doesn’t need the approval of a lending company. Instead, they either have the cash on hand or can quickly obtain the cash if they choose to liquidate other investments they’ve previously made.

Why Would A Seller Advertise Only To Cash Buyers For A House?

There are many different reasons a seller might want a cash buyer for their house. Maybe one of the biggest ones, though, is the fact that cash buyers can move quite quickly when it comes to home sales. If you have a cash buyer for a property, you’re more likely to get it on and off the market as fast as possible. With a buyer who has to apply for a mortgage, you could be looking at adding several weeks to the sales process alone. Another reason attracting a cash buyer for a house is such a popular way to move forward is that the sale is less likely to fall through at any point in time. When you sell your home to a cash buyer, property problems are far less likely to happen because there’s less that can go wrong. There’s typically no chain involved. There won’t be any problems with the mortgage process. What’s more, though, is that the entire process moves so quickly, no one is likely to get cold feet while they’re waiting, which helps offer a seller far more assurance.

The sellers aren’t the only ones who gain advantages from cash buyers, though. Cash buyers are also at a real advantage because they’re more likely to have their offer selected over other buyers. Because cash buyers can be so incredibly reliable and the transaction can be so fast, sellers love to have a cash buyer on their side. That benefit leads to another one. Cash buyers often get a home at a much better deal than other buyers might. Cash buyers can bid far lower than other buyers, and that can mean you get a great home at an incredible price.

Maybe the biggest advantage of being a cash buyer, though, comes from the simple knowledge that you own your home without being in debt to a mortgage company. Instead, you’ll never have to worry about your circumstances changing and being unable to afford the mortgage repayments.

Are There Any Disadvantages To Being A Cash Buyer?

If you’re one of the individuals who feel like they can join house buyers with cash, you may wonder whether there are any real disadvantages to the process. Initially, one of the biggest drawbacks you’ll want to think about is whether or not you feel like you might need that money down the road. If you think you may need access to that cash in just a year or two, it can be hard to liquidate an asset like a home very quickly. The good news, though, is that you can buy a house with cash, and then get a mortgage fairly quickly. That will usually give you access to the cash you needed.

The other real concern you should consider is whether the property prices in the area where you’re considering your home purchase are increasing or decreasing. If they’re increasing significantly, the investment is a fairly worthwhile one. If the market is growing slowly, though, or worse it’s contracting, you may be in a bit of a struggle to get the true value out of the investment.

How Do You Buy Houses For Cash?

Naturally, the process of using cash to buy houses sounds like a great deal, but how can you become a house cash buyer? It doesn’t always happen overnight. The first step is actually to find the money you need to buy a given property. If the money isn’t already in your bank account, though, you can still become a cash buyer for a property. Naturally, one option you have is to simply save all of the cash you’ll need for a house. Given that the average home value in the UK is going up quickly, though, that’s not always going to work for everyone.

The other option you have, then, to join the ranks of cash buyers for houses is to use an investment you already have, liquidate it, and then use that to become a property cash buyer. There are many different investments that you can use to do that too. Whether you already have stocks and bonds that you can turn into cash or you have the option of cashing out your retirement account, you likely have access to the capital you need in another form. Some people even say “I’ll sell my house for cash,” then save a bit after the house itself is sold, and turn that into cash for another home. Remember, any property you own is an asset, and if you own one without a mortgage or one with only a small mortgage, it’s possible that you can sell that house for cash and invest the cash into another property.

Once you figure out your answer to the question “Can you buy a house with cash?” you can begin to consider how to make it happen. Property cash buyers follow the same process as anyone buying a house – cash or no cash. Initially, you will need to make a bid just as other buyers do. Once your bid has been accepted, you’ll need to instruct either a licensed conveyancer or your solicitor. You’ll also need to go ahead and order a property survey (or at the very least, a valuation). These will help to ensure that the property you are purchasing is worth the amount you’re paying for it.

It’s important to note that a property survey differs from a valuation. A valuation is just designed to help you understand exactly what the home you’re buying is worth. Valuators consider a few different factors. The first is where the property is located. That can have a fairly big impact on the price. Other factors they consider include the overall size of the property, the number of bedrooms and bathrooms included in the property, how much outdoor space is available, and whether there’s any real potential for the property to be developed or expanded. Naturally, if some other features or characteristics should be considered, they will be factored in.

A survey, though, is an assessment that looks at the overall condition of the property. This is particularly important for any buyer because you want to be sure that if any issues could harm your potential investment, you have them looked into as soon as possible. As a potential buyer, a survey helps you better understand the types of repairs that may be necessary for the future. Naturally, this is key if you want to live in the home, but it’s even more important if you plan to use the home for investment properties. There are three different survey levels, each increasing in intensity, so you’ll need to choose the one that provides you with the highest level of peace of mind before you make your purchase.

While the survey is being completed, your conveyancer or solicitor will conduct numerous searches, queries, and checks to make sure it’s completely legal for you to buy the property and that there are no previous holds or possible legal problems that might come up in terms of ownership shortly.

When those checks are complete, you’ll exchange contracts with the buyer, pay your deposit, and set the day of completion. Once that big day arrives, you simply transfer your cash to their bank account, and you’re all set. You will have purchased a home with cash.

Are All Cash Buyers For Houses The Same?

Many home sellers advertise “Buy my house for cash” without understanding what house cash buyers mean. Not all cash buyers for houses are the same. Those companies that advertise “We Buy Houses for Cash” are not the same as individual cash buyers. While an individual cash buyer might be looking either for a home or an investment property, those companies are looking solely for investment properties. That doesn’t, however, mean the process works any differently. What it may mean for the seller, though, is that they may have to take an offer that is significantly less than what they were asking for. It does, however, tend to provide a sure, fast sale.

Why Sellers Might Want To Work With A We Buy Any Houses Company

There are many reasons sellers might decide to work with one of these kinds of companies, and often those reasons overlap with the reasons they might seek a cash buyer in the first place. Initially, these kinds of investment companies tend to offer a level of speed that other buyers (even individual cash buyers) simply can’t match. They’re professional house-buying companies because they work continually to find new properties to buy, repair, and then either rent or flip. That means they already have a team in place to help. Often, they have a survey professional on staff as well as conveyancing help ready to help them buy the next property. A need for an extensive survey or even a second look at the house is often unnecessary for these companies. They know exactly the kinds of homes they’re looking to buy, and they make those purchases very quickly. That’s an incredible advantage for someone who just needs to get out of a home as fast as possible. Imagine, for example, you’ve been transferred to a new office at work. At that point, you just need to get out of your home so you can move to your new space. The same might be true if you’re leaving a relationship where you’re ready to make a fresh start. It often happens with inherited properties as well.

Besides speed, though, these companies offer other real advantages to sellers. The second of those advantages is sureness in making a purchase. These companies know exactly what they want in a property, and once they make an offer, they’re not going to turn back. Instead, they will make sure the sale goes through as fast as possible so they can get started on their next big project. That isn’t always true with other kinds of buyers, even individual cash buyers.

The final real advantage that cash home-buying companies offer to sellers is an easier sale. Most sellers have to do quite a bit of work initially to their homes to create more curb appeal. Creating stronger curb appeal is what tends to attract buyers initially to a home, and that can mean things like making small repairs, adding paint, and taking other steps. All of that can add up, though. If a seller feels unable or just unwilling to make those changes, companies that will buy houses fast for cash are in a good position to purchase without the need for curb appeal touches because they’re likely already planning the changes they’d like to make to the property anyway. A coat of paint and a good trimming of the back garden isn’t going to make a difference in whether or not they purchase that property.

In all of these situations, working with one of these kinds of home investment companies is a great option. They tend to pay up to 80% of market value for a property, and they can complete the sale quickly, which means the seller can move forward with their life.

Is Buying A House With Cash The Right Choice?

While there are many different topics involved in buying a house with cash, you may be left with one key question on your mind after reading – is buying a house with cash the right choice for you? As with any other home purchase, whether because you want to live in the home or for investment purposes, you need to look at your financial situation to make the actual decision that is going to be right for you. If you have plenty of cash on hand, and you’re not concerned with any of the drawbacks of making a cash purchase, buying a home in this manner can be a fantastic idea. If, however, you have some concerns about buying a house in this manner, you may want to make another choice with your money right now. As always, any transaction involving this amount of money needs careful thought. It may also be a good idea to consult your financial advisor to help you better weigh the pros and cons of making a purchase as big as this one. Buying a home with cash can be a great idea, but you’ll want to give the matter quite a bit of thought before you simply decide what might be right for your family and your money.

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