Is It Worth Selling Your House to a Cash Buyer in Prime, Central London?

Selling your home brings so much uncertainly – mounting costs, paperwork, the stress of arranging loans and risk of the property chain collapsing if a mortgage deal falls through. Some believe that the less stressful approach is to sell your home to a cash buyer.

It’s a popular way to buy or sell in prime central London. Approximately 58% of property purchases in Kensington and Chelsea and 51.5% in the City of Westminster are cash sales, according to figures reported in IFA Magazine. If you are considering buying outright with a cash offer in Marble Arch, Marylebone or South Kensington – or looking to sell your house to a cash buyer – you are far from alone. However, this approach may not suit everyone.

Read on to find out how to sell your house to a cash buyer, and explore the pros and cons of being a cash buyer in London…

What is a cash buyer?

A cash buyer is someone who has sufficient funds to buy a house outright without needing to secure a mortgage or sell something, such as another property.

Is it illegal to sell a house for cash?

It’s perfectly legal to sell your house for cash. However, cash buyers must pass the estate agents’ anti-money laundering checks to prove that the money has not been earned illegally.

Benefits & downsides of selling a house to a cash buyer

Benefits of selling house to cash buyer:

Whether you are a buyer or seller, there are potential advantages when you sell a house for cash.

1. The sale is less likely to fall through

The buyer will not need to arrange a mortgage after making a cash offer, eliminating the worry that they will be unable to raise the necessary funds and cause the deal to fall through. Each year, around a third of collapsed sales are a result of the buyer’s finances not being in order.

2. There is no complicated house chain

One of the benefits of selling to a cash buyer is that they will not be part of a property chain. There’s no need to wait until someone has bought their property, reducing the danger of the deal collapsing during the selling process.

3. The process can be a lot faster

It generally takes around one month for a buyer to secure a mortgage offer, which may feel lengthy if you need a quick house sale. A cash buyer already has all the funds they need to buy a property outright, so this waiting period is eliminated.

4. There is more security

As a cash buyer, you will own the property from day one. If you subsequently fall into financial difficulty, you won’t need to worry about getting behind on mortgage payments.

Want to find out more? As a seller, you may also want to read solicitor fees for selling a house and taxes on buying and selling property.

The disadvantages of selling house to cash buyer:

Selling a home to a cash buyer can be a good idea in certain circumstances. However, you should consider the cons of selling for cash before accepting a cash offer.

1. Cash offers are often less

Cash is king, and many genuine cash buyers believe this gives them the power to demand a discount on the asking price.

2. Cash sales can still fall through

The buyer could still have a change of heart at the last minute, or the survey may flag up issues that result in them pulling out of the purchase.

3. Is there something wrong with the property?

Buyers can be put off by properties marketed as is to “cash only buyers”, as this can indicate that the seller suspects a mortgage provider’s checks may pick up something wrong with the property.

However, this is not always the case; there are several legitimate reasons to specifically request a cash buyer when you sell your house. They may need to sell quickly for personal reasons.

4. Loss of liquidity

It sounds obvious, but ensure you have enough money to cover your day-to-day living expenses before making a cash offer.

5. Risk of scams

Whilst rare, scammers posing as cash buyers are out there. The “buyer” will offer you a cashier’s cheque but then come up with a lie about why they need you to refund a portion of the funds, for instance, an accidental over-payment. When the cheque is later found to be a forgery, you will still be responsible for the funds you transferred.

The best way to avoid scammers when you sell your house is to use a reputable estate agent.

What is the process for buying a house with cash

The process for buying a house with cash is essentially the same as any property purchase. The obvious difference is that the cash property buyer will not need to arrange a mortgage.

Once your offer is accepted, instruct a conveyancing solicitor and a surveyor. A wise cash buyer performs the same due diligence checks as a mortgage provider by commissioning a survey and property searches before lending money for a house. If all runs smoothly, you will exchange contracts, hand over the deposit and finally complete.

Questions you should ask a cash house buyer

Avoid making assumptions – find out all the details from your buyer by asking questions before you progress with selling your home:

1. Does your cash buyer have the funds available and are they ready to purchase? Find out about potential delays early on.
2. Do they expect a price reduction for paying in cash?
3. Will they be carrying out the same survey and searches as a mortgage lender?
4. If they’re a cash buying company, ask in-depth questions about their valuation process and tie-in clauses in the contract.

Caution when selling a house for cash

Be careful if you’re desperate for a quick house sale, as the cash offer may not be genuine. The National Crime Agency estimate that £10 billion may be laundered through property purchases in the UK each year. However, a service covered by your estate agent fees can protect you. To safeguard your property sale to a cash buyer, estate agents carry out certain checks:

• Proof of funds – the buyer must show estate agents that they have funds in place and their origins, such as an inheritance or property sale.
• Identity checks – verify that the buyer is who they say there are with photo identification.
• Anti-money laundering checks – estate agents have a legal obligation to ensure they don’t sell the house to a buyer who’s paying with the proceeds of crime.

Want to know more? It’s also worth budgeting using our guide to the cost to sell a house and finding out why your flat might not be selling.

What about companies that buy your house for cash?

Be cautious about selling to buying companies, as their offers may not be as good as they seem. Property buying companies that offer to buy any house for cash typically offer a quick sale for your property as seen, with no need for multiple viewings. However, that appealing cash offer for a quick house sale can come at a cost.

Cash buying companies often pay under market value (around 80%), and there is no government regulator, though some are members of the National Association of Property Buyers or The Property Ombudsman. You may have to pay for their valuation, and if the cash house buying company covers your legal fees, the amount may be deducted from the sale price.

Beware of valuations reducing after you’ve committed to selling your home, and gazundering can be an issue with home buying companies. Unscrupulous property buying firms have been known to make last minute price cuts, or delay after you’ve signed a tie-in agreement, under threat of exit penalties – not ideal when you need to sell a house fast.

Frequently asked questions

We are often asked these questions about cash buying and selling your house.

Is there another way to avoid the stress of selling a house?

Yes. Take expert advice. Professional guidance and support can relieve the stress of selling a property, even if it is a cash sale.

Although many cash buyers are genuine buyers looking to buy a new home for themselves and their families, companies and investors may be looking for a quick sale or bargain. Cash is king, and many genuine cash buyers believe this gives them the power to demand a discount on the asking price – and if you sell your home to a property buying company, that discount often exceeds what estate agents will charge.

At Plaza Estates, we can act as a go-between for the seller and buyer, forging an agreement that suits both parties, negotiating with the cash buyer on the seller’s behalf.

Having a cash buyer can alleviate some of the stress of moving house, but situations can still arise where you may need our guidance. Contact us today and find out how we can help you in areas like Hampstead, Victoria, Little Venice, Kensington, Battersea, Bayswater, Mayfair and Holland Park.

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