Are you a cash buyer?
If you are fortunate enough to be able to purchase property for cash, you will enjoy a number of advantages over other potential buyers.
Certainty and speed
Firstly, you will know exactly where you stand and how much you can spend. You will not be wondering about whether the bank will give you a loan and, if they agree, how much they will be prepared to give you.
This will give you the potentially significant advantage of being able to move quickly when the right property comes along. This may make you an extremely attractive proposition for the vendor of the property you have your eye on, especially if they are looking for a quick sale.
Not only can you go sale agreed early in the sales campaign you can also assure you will be able to complete the sale quickly as you will not be jumping through hoops to satisfy the lender’s requirements. These would typically include having a valuation carried out, proving source of funds, putting in place life assurance and home insurance prior to drawdown.
Problems with the property
Secondly, you will be able to overlook any imperfection in the property itself or in the title or planning documents. A competitor bidder, relying on a bank loan, will not be able to do this without the bank’s consent.
A problem with the property itself could include the requirement to carry out significant improvements to bring it up to scratch and habitable. Banks are inherently conservative and the prospect of uncertain future expenditure on the property will not be something that will endear a borrower to any potential lender.
A problem with planning may be of such significance that the bank will be concerned about getting good title to the property. Good title, you must understand, is title that will allow the bank sell the property if it is obliged to repossess. If there is any question mark over this the bank would be slow to lend.
The bank may or may not consent, depending on the extent of the problem with the property.
As you can see a problem can cover a wide range from something relatively minor which is easy to fix. Or it could be something much more significant such as a problem with a right of way or access to the property which would go to the quality of the security the bank will be holding after the purchase has completed.
Thirdly, the estate agent will be aware of the value of a genuine cash buyer versus one who only has loan approval in principle, or who is awaiting loan approval. The view of the estate agent, in advising her client, the vendor, will almost certainly be helpful to your bid.
To put it plainly, you will almost certainly have a supporter in the estate agent because the estate agent will recognise the value of a bird in the hand versus two in the bush.
A cash buyer does have significant advantages over a buyer who is borrowing.
However, if the vendor is patient and not in a hurry, and there are no problems with the property or the title to the property the advantages will be reduced to a point which levels the playing field. The vendor may adopt the view that he wants the highest price possible for the house and is prepared to wait, if necessary.
If this is the case the purchaser who is borrowing is at no disadvantage.