How much of an advantage is a cash offer to a seller?

martin18

Hello there, looking for a home at the moment, able to pay cash up to a certain amount. Have only ever bought a home overseas before, and so I'm wondering how much of an advantage paying cash confers in the Irish market versus someone who is preapproved for a mortgage. Specifically, I'm wondering if a cash offer would warrant asking for a more significant discount over asking (speaking generally and in principle of course). Opinions appreciated!

banie01

Cash is usually not an issue to a seller unless their property has something wrong that makes it unmortgageable.
e.g a title defect, planning issue or compliance certs.

All other things being equal and in an active market, your cash offer means nothing to a seller.
The conveyancing process will still need to be undertaken and no money Mortgage funds or immediate cash will be available to the seller until completion in any case.

So barring a seller motivated for a suspiciously quick sale with you taking an inordinate amount of risk in terms of title and compliance issue, there really is no actual immediate benefit to having funds immediately available.

daheff

Sellers prefer a cash buyer as it can mean the transaction completes quicker and with less potential complications (chain etc).

So if you are a cash buyer make sure you let the selling agent know.

banie01

banie01 wrote: »

Cash is usually not an issue to a seller unless their property has something wrong that makes it unmortgageable.
e.g a title defect, planning issue or compliance certs.

All other things being equal and in an active market, your cash offer means nothing to a seller.
The conveyancing process will still need to be undertaken and no money Mortgage funds or immediate cash will be available to the seller until completion in any case.

So barring a seller motivated for a suspiciously quick sale with you taking an inordinate amount of risk in terms of title and compliance issue, there really is no actual immediate benefit to having funds immediately available.

Have to strongly disagree with you there.

There is a lot less scope for problems with a cash sale, such as bank valuation, withdrawal of finance, delay in drawdown, changes in employment status etc. Particularly now when banks are less enthusiastic about lending to people in sectors effected by the economic downturn caused by Covid.

Op, your cash offer will viewed more favourably than a financed offer, and should be worth a discount on a financed offer. Personally, if I was selling now, I would snap the hand off a cash buyer irrespective of whether I needed to sell or not.

December2012

A seller may prefer a cash buyer in the current market because there is less risk of a bank pulling the loan offer and there is no chain. What type of a discount this will get you depends on the property and the current sale price?

Graham

I think in any market a cash buyer is preferred.

One less party to the transaction
Removes the wait for finance to be arranged.
Removes the need for an existing property to be sold.

Less moving parts, less to go wrong, everything moves faster.

martin18

Thanks very much for all the feedback, appreciated. When selling my house overseas I really didn't care about this, but I can see that in the current market it might make a difference.

em_cat

We were cash buyers, however against popular areas like Blackrock, Booterstown, Monkstown, coastal South Dublin it didn’t make any difference especially if it was an executer sale. You might have better luck with new build or non executer sales though. In the end we bought an infill site as it suits us better, however I will stress that we are still in conveyancing, since December last year., apparently closing this week, but not holding my breath.

Deebles McBeebles

Related to this, how much of an advantage is it to be able to offer a large deposit, say 1/4 of the house price?

Deebles McBeebles

Deebles McBeebles wrote: »

Related to this, how much of an advantage is it to be able to offer a large deposit, say 1/4 of the house price?

There is no benefit to offering a larger deposit than necessary, the deposit is refundable until contract is signed.

guyfawkes5

Dav010 wrote: »

Have to strongly disagree with you there.

There is a lot less scope for problems with a cash sale, such as bank valuation, withdrawal of finance, delay in drawdown, changes in employment status etc. Particularly now when banks are less enthusiastic about lending to people in sectors effected by the economic downturn caused by Covid.

Op, your cash offer will viewed more favourably than a financed offer, and should be worth a discount on a financed offer. Personally, if I was selling now, I would snap the hand off a cash buyer irrespective of whether I needed to sell or not.

Cash buyers are a definitely a plus and a little more so now with the Covid subsidy (although less and less over time now as the worst eases off), but it's usually the sort of thing that might separate two matching or nearly matching bids rather than being hugely more valuable as you seem to insinuate. For instance, I couldn't see a seller willing to lose 5% from the selling price just because it's a cash buyer.

If there's something defective or unusual with the property that would prevent a mortgaged sale, then those sort of discounts exist. In fact it may even be much, much more.

guyfawkes5

guyfawkes5 wrote: »

Cash buyers are a definitely a plus and a little more so now with the Covid subsidy (although less and less over time now as the worst eases off), but it's usually the sort of thing that might separate two matching or nearly matching bids rather than being hugely more valuable as you seem to insinuate. For instance, I couldn't see a seller willing to lose 5% from the selling price just because it's a cash buyer.

If there's something defective or unusual with the property that would prevent a mortgaged sale, then those sort of discounts exist. In fact it may even be much, much more.

Ya I’d pretty much agree with you, but it depends on the vendor circumstance and in no small part on the value of the house. If the vendor needs/wants a quick sale, you might get a good discount on a financed bid, or if you are talking about a €1m house, a 5% cash discount would be good business to get it wrapped up quickly.