Bydesign Logo

Is cash always king when buying a new home?

Is there any benefit to waiting for a cash buyer to make an offer on your property? Or, indeed, putting yourself into the position of being able to buy using cash rather than financing? Read this article to find out.
Is cash always king when buying a new home?
It has been a long-held belief that cash is king when selling a property. Cash buyers would make lower offers because they held this advantage, believing sellers were almost grateful they had no reliance on mortgage finance. But is this still the case? Is there any real benefit to putting yourself in this position? Should you hold out and try to sell your property to a cash buyer?

Cash buyers became the preferred option for sellers because there was no reliance on mortgage funding. There is no chance that the buyers will be turned down for a loan or that the mortgage lender will remove a product and cause drama for your sale.

But is it essential to hold out when you are selling your property, waiting for a cash buyer? Particularly when there is no guarantee that the sale will complete smoothly. A cash buyer might not be able to offer a seller a faster transaction as there is every chance that the buyer will have their cash tied up in shares or savings accounts that require a notice period for release, so even though they have the money, it might not be readily available, meaning that the sale might not be any faster than a buyer with mortgage finance. And, of course, they could just as easily spend their money and leave themselves without the available funds to purchase.

There is also a case to say that a buyer paying for a property with cash may be more reluctant to actually spend the cash on buying a property when there is a balance in an account. Psychologically, it feels like a large purchase, much larger than when buying a property with mortgage funding, when the amount is not physically visible and the money never actually touches the hands of the buyer but is instead paid from the lender to the solicitor directly.

In essence, there is a higher chance of achieving a higher offer for your home if you sell to a buyer using mortgage funding. The limit to their budget is not as fixed as they can often borrow a little more. The benefits of guaranteed available monies from a cash buyer might not be enough to make you comfortable selling your property for a lower figure.

Even though interest rates have risen dramatically in the last year, mortgage finance is still a comparatively cheap way to borrow money. There is no reason that you should a) hold out for a cash buyer for your property, discounting offers from buyers with mortgages, or b) go to any extreme length to put yourself into the position of a cash buyer for your onward purchase.

Yes, it is nice to know that the money is there, but with the correct checks and research in place, a buyer using mortgage finance is almost as concrete, and they could more than likely offer to pay you a higher price for your property.

If you are considering selling your home, contact your local By Design agent to get the ball rolling. Thorough finance checks are carried out for every offer, no matter how they intend to raise the funds to buy.