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Seasoned cash buyers can be seen by agents sometimes as more risky and fickle than a novice but committed mortgaged buyer
If you have 400K cash then you are wealthy and you can afford to lose 1K in fees if you tire of the deal
The 400K wont be probably your life savings . You may have a safety net of another 100K ( just guessing )
You might put in multiple offers but are more prone to ditch an accepted offer if another better one turns up
You might be prepared to spend 3 x 1K fees simultaneously but when a new magical 20K saving suddenly surfaces mid process a cash buyer may without a care in the world jump ship on those 3 to plough all their energies into this new baby
A first time buyer though who puts their heart and soul into the property and the process with a 75% LTV is investing in their future so the 100K they put down is maybe at the limit of their budget and the thought of it going pear shaped is unthinkable as is losing 1K in fees. They are committed to it lock stock and barrel so to the agent and vendor can be seen a better prospect than that greedy, here today gone tomorrow, cash buyer
I used to offer both routes to the agents to give confidence and flexibility .
I hit the midway path by saying I am going for a mortgage but i have cash back up in case i dont get a mortgage .
To push me to the front of the queue with the agent i would shamelessly say go with me because if i get a 75% LTV mortgage then i have 3 more opportunities to buy through you and that means 3 more commissions for you . You could almost see the adrenaline rushing through their veins. Often its the agent I have to win over not the vendor so i appeal to their base instinct which is of course their commission, now and in the future
There are many routes to a discount.
Cash can yes be one
But sometimes it can be counter productive so dont be too brazen about flashing the cash. Be subtle
But in these days of PRA restrictions it has to be said that cash has returned to a higher status and yes maybe worth an additional 2% discount sweetener on a 400K house over a mortgage buyer
The asking price though is irrelevant to that 2% discount differential
In London lob off loads at the moment - you will be welcomed just because you are actually buying
360 mortgaged or 350 for cash
Jonathan Clarke. http://www.buytoletmk.com
Thanks Jonathan. I'm always keen to learn about different approaches, and you have given me some food for thought.
Expect a lot of uncertainty for the foreseeable future.
For buying now : winter is traditionally slow so anyone selling will listen to offers, many buyers are holding fire (uncertainty, Brexit, fear of market colapse) so you are well placed.
Against : how many S24 sales will appear early next year? more end of term IO coming to an end? Brexit impact? Foreign investors selling due up to exchange rates?
It depends on the sellers circumstances. An example house on market £230k a probate job so no chain or related purchase . I offered £185k they said not less than £200k I said £195 or I walk, they said OK
Just look at loads of properties and put some in low offers on all of them, someone will ( hopefully) eventually accept
do not even think about massaging the numbers to buy something that doesn’t make money, it will be a millstone. Make a note of it, follow up until it sells and move on to the next one.
dont fall in love with any of them in any way, they are only to make money, think of your holidays instead
I always buy cash and I find that the cash doesn't give you any more discount than you can negotiate anyway (if you're a good negotiator).
But what it does give you is it bumps you up the queue so for example if you have 3 buyers all offering the same but you are the only cash buyer, you will get the deal.
So in conclusion, the cash doesn't get you a better price but you do get taken seriously. This is my experience anyway.
Thank you all very much for your answers; lots of brilliant viewpoints.
Food for thoughts...
Cash these days is almost a hindrance in that you’ll be asked to prove where its come from, not unduly onerous but more work. The only properties where its king is for those that are unmortgagable at which point you’ll need to be able to see the issues and know how to deal with them and be competing with equally savvy buyers.
As mentioned several times in the thread buyers with a mortgage will likely be willing to offer more. Over the years I’ve missed out on 3 properties advertised as cash only made good offers but in each case the eventual buyer has convinced the vendor that they can get a mortgage and will pay more. Agents are complicit in this as in two cases i’d have been happy to matched the eventual price in cash.
As ever many agents have cosy relationships with their preferred buyers of “bargain” property, having such a relationship with an agent will be far more advantageous than cash will ever be.