You want to sell your house. You need to sell your house. You have no doubt discovered that it is certainly harder than it looks on shows like Mega Mansion Hunters or Selling Sunset in the States! With these mega properties fetching £10m, £20m, £30m and more… It can feel even more frustrating that you are having difficulty selling for £200,000, £150,000 or £100,000. Cash house buyers may be the answer for which you’ve been searching. What do you need to know before you make a decision?
About Cash House Buyers in the UK
Cash is king, or so they say. Lately, that’s proven quite true. According Financial Times, mortgage-free buyers are ‘driving the property boom.’ Of all property transactions in the UK, 428,000 went to cash buyers in 2022, who spent a collective £178b. Both statistics are higher – 17% and 32% respectively – than in the three years prior to the pandemic.
This comes at the same time that obtaining a mortgage is becoming more difficult. Given the rise in inflation, and thus in interest rates, it is more expensive to borrow money. Backing up a step, it’s also harder to qualify in the first place. In the case of purchasing a home, most lenders require a substantial deposit.
According to Rightmove, the UK’s largest online real estate property portal, a single person making the median wage would need to put down a £74,402 deposit in order to get approved for a mortgage. This takes into consideration their income, borrowing ability of 4.5 times their salary and a home price of £223,117 (current average asking price). This is quite a sum. If one saved £100 a month, it would take 62 years to get a deposit together. (By comparison, a decade ago, you’d need a more manageable £35,000).
For dual income partners, the deposit has grown from £14,269 a decade ago to £23,312 currently. At 10%, this is more reasonable than nearly £75,000, it is still a leap for many people.
At any rate, this has made conditions more optimal for cash buyers. They do not have to worry about servicing their debt (i.e. qualifying first and then paying interest over the course of years or decades), and they are typically less squeezed by cost of living increases and inflation.
Different Kinds of Cash Buyers
While it may be a great time to be a cash buyer – or, as a seller, to appeal to cash buyers – it is important to recognize that there are differences between mortgage-free buyers.
One type of cash buyer is one who does not need a mortgage and can complete a purchase if they first sell their house. This can work out well for sellers. If. If is always the keyword. If they get an acceptable offer, if they don’t hit any snags during the conveyancing and search processes, if nothing has changed with their financial situation and they still qualify for a mortgage, if their lenders find surveying reports and valuations acceptable and extend the loan… If they don’t change their mind along the way, leaving you back at square one.
Yes, these buyers may be in a good position to purchase your house… If all goes well.
‘Mortgage-less’ buyers who have the cash reserves and substantial backing from financial institutions do not have to wait for a sale to go through before they can purchase your property. They are able to do so at the time you express interest and, when they make an offer, they have the funds to back it up. This is a different kind of ‘cash buyer.’ They are not restricted to the myriad if’s that hold others back, including the necessity of making a sale before they can make a purchase.
If you are under tight time constraints when selling your house, waiting for a cash buyer who must also wait for a sale can create significant delays. After all, they are dealing with all the ifs too… and no sale is guaranteed until completion.
If you are looking into cash house buyers as the prime audience for your property, it is important to know the difference. It is one more piece of information to help you make the best decision possible for your present – and your future.