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What exactly is a cash buyer?

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  • 19-05-2017 4:20pm
    #1
    MaudL
    Registered Users Posts: 231 ✭✭


    I've seen a few properties for sale where the ad mentions that only a cash buyer will be considered.
    What is a cash buyer exactly? I doubt there are many people sitting on a few hundred thousands in cash these days, unless their previous property has sold and they're renting/living with family.
    So I'm guessing it means if you're in a chain then don't bother, but would this also apply to first time buyers with full mortgage approval?


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    #2
    eeguy
    Closed Accounts Posts: 3,478 ✭✭✭eeguy


    They're talking about people in a chain.
    Probably got stung before.

    If you have mortgage approval then you have cash on hand (providing everything else goes to plan)


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    #3
    wench
    Registered Users Posts: 1,631 ✭✭✭wench


    It can also mean there is something wrong with the property such that you couldn't get a mortgage on it.


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    #4
    punisher5112
    Registered Users Posts: 24,647 ✭✭✭✭punisher5112


    Some properties are like this due to no mortgage will be accepted as its an investment property due to tax reasons and also some were built as holiday homes so can't be used all year round or be permanently lived in by owner.


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    #5
    Baby01032012
    Registered Users Posts: 1,622 ✭✭✭Baby01032012


    As Wench said its likely that there is some condition or issue that would result in the buyer not being able to get mortgage approval, therefore only for cash buyers. Believe me there are plenty out there with the money buy with cash only.


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    #6
    NRR
    Registered Users Posts: 16 ✭NRR


    It can occasionally (in some places in the world I'm familiar with, at least) be a bit of a tax-dodging ploy.

    If you're willing to settle in cash, they'll put the actual sales price at a more favourable (i.e. lower) point and try and work out a "handshake" deal for the rest. Obviously not happening everywhere, but not unheard of.


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    #7
    wordofwarning
    Closed Accounts Posts: 697 ✭✭✭wordofwarning


    wench wrote: »
    It can also mean there is something wrong with the property such that you couldn't get a mortgage on it.

    I would guess it is this. A vulture fund might have brought it. They were handed a portfolio of a few hundred properties and did not bother to due diligence. So when they went to sell it, the purchaser realised the title is a wreck.

    I know someone who had a property repossessed and sold to a vulture fund. It is now on the market for the third/fourth time, as cash buyer only. It is buyer beware, as the title is such a mess. It has gone sale agreed several times and each time the buyer has likely been told no by the bank

    If you think about it for a minute. About 55% of house purchases involve a mortgage. If you are reducing the number of potential buyers by 55%, there has to be something wrong. You are entire stuck for cash and need it ASAP. Or you know a bank won't give a mortgage on the property

    If you are buying a cash only property you need an excellent solicitor to see that you will be able to sell that property in a few years


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    #8
    Victor
    Registered Users Posts: 78,285 ✭✭✭✭Victor


    NRR wrote: »
    It can occasionally (in some places in the world I'm familiar with, at least) be a bit of a tax-dodging ploy.

    If you're willing to settle in cash, they'll put the actual sales price at a more favourable (i.e. lower) point and try and work out a "handshake" deal for the rest. Obviously not happening everywhere, but not unheard of.
    That isn't the specific implication here. But it happens any way, even if its a chain or mortgage purchase.


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    #9
    davo10
    Closed Accounts Posts: 6,926 ✭✭✭davo10


    A "cash buyer" is not literal in its meaning, it does not mean the buyer pays in €50 notes. It means that the buyer has the capital to buy the property without the need to draw down a mortgage or sell a property to fund the purchase.

    Cash buyers are preferable for a number of reasons but principally the transaction is quicker as there is no third party (bank) involved. The survey is not as important and there is is less likelihood of the sale failing through. Cash buyers can often get a discount on a purchase price due to the above factors. I have bought and sold property in "cash" sales, nothing wrong with building, title, tax dodge etc, it's just easier. I would prefer to sell quickly for €20k less to a cash buyer than someone who needs a mortgage and the sale could drag on for months.


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    #10
    LirW
    Registered Users Posts: 4,825 ✭✭✭LirW


    How much faster in the end can a Cash buyer move than someone with a mortgage? Genuinely interested because I don't know.


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    #11
    Radiant Cool Crazy Nightmare
    Registered Users Posts: 237 ✭✭Radiant Cool Crazy Nightmare


    LirW wrote: »
    How much faster in the end can a Cash buyer move than someone with a mortgage? Genuinely interested because I don't know.

    To add to this, I was mortgage approved after selling my house. From going sale agreed to moving into the new house was just over 4weeks.


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    #12
    athtrasna
    Closed Accounts Posts: 13,420 ✭✭✭✭athtrasna


    LirW wrote: »
    How much faster in the end can a Cash buyer move than someone with a mortgage? Genuinely interested because I don't know.

    My ex lodger went from offer to keys in under two weeks. No mortgage on either side so both he and the vendor were able to push things through very swiftly


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    #13
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    MaudL wrote: »
    What is a cash buyer exactly? I doubt there are many people sitting on a few hundred thousands in cash these days

    A cash buyer is exactly that, a person with hundreds of thousands in the bank who can buy the house with no mortgage. This may be from the sale of another house but there are far more people than you would think with very large amounts of cash in the bank.


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    #14
    davo10
    Closed Accounts Posts: 6,926 ✭✭✭davo10


    LirW wrote: »
    How much faster in the end can a Cash buyer move than someone with a mortgage? Genuinely interested because I don't know.

    It can be completed as soon as the solicitor prepares the contracts of sale, that could be days.


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    #15
    Fol20
    Registered Users Posts: 3,624 ✭✭✭Fol20


    wench wrote: »
    It can also mean there is something wrong with the property such that you couldn't get a mortgage on it.

    This is exactly what it is.

    If it's advertised on the ad. It something is wrong with the property. The things I have seen are no management company's in place, the management company have a discharge against them, right of way issues or leaks in roof and issues with transfer of common areas.

    As a result the property can be advertised at a serious discount and although some might be worth investing in. You have to verge on the cautious side of these types purchases.

    You would be surprised. There are a lot of cash buyers out there. I rencently sold a house and it was a cash buyer for a decent chunk of change.


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    #16
    davo10
    Closed Accounts Posts: 6,926 ✭✭✭davo10


    Fol20 wrote: »
    This is exactly what it is.

    How do you know this with such certainty?

    Maybe they are looking for a quick sale with less chance of complications. Over half of all property purchases last year were cash sales.

    If I was selling my home, I'd much prefer a cash buyer, there is no problem with title, management co, tax, boundaries etc. I honestly can't think of any reason why a seller would not prefer a cash buyer.


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    #17
    the_syco
    Registered Users Posts: 37,295 ✭✭✭✭the_syco


    davo10 wrote: »
    I honestly can't think of any reason why a seller would not prefer a cash buyer.
    For a seller, there is really no clear downside.

    For a cash buyer, buying off a "cash only" seller may have pitfalls if they go in blind. As said already there could be something wrong with it, and as such the buyer may go for such as a house with the knowledge that they could haggle more with the intent on fixing the house themselves.


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    #18
    cruizer101
    Registered Users Posts: 3,205 ✭✭✭cruizer101


    I know thread is bit old but didn't really feel it warranted new thread.

    I saw a house which has cash buyer only in description, but there is no detail of why. Is the seller obliged to tell you if there is some problem regarding planning, title, etc which wouldn't allow for mortgage, if you ask them?

    I'm not actually cash buyer but am interested in property and if it is just a case of them looking for quick sale I'm ftb so no property chain so may be able to negotiate.


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    #19
    Lumen
    Registered Users Posts: 31,017 ✭✭✭✭Lumen


    cruizer101 wrote: »
    I saw a house which has cash buyer only in description, but there is no detail of why. Is the seller obliged to tell you if there is some problem regarding planning, title, etc which wouldn't allow for mortgage, if you ask them?
    The seller isn't obliged to do anything before solicitors get involved, other that get a BER cert done.

    Just ask them why. They may not tell you, but expressing an interest is a useful signal, the EA may be able to persuade the vendor to sort the issues out.

    This isn't just a mortgage issue, even if you have cash any decent solicitor will block the sale if the title isn't right. Planning, well....


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    #20
    Claw Hammer
    Registered Users Posts: 6,163 ✭✭✭Claw Hammer


    cruizer101 wrote: »
    I know thread is bit old but didn't really feel it warranted new thread.

    I saw a house which has cash buyer only in description, but there is no detail of why. Is the seller obliged to tell you if there is some problem regarding planning, title, etc which wouldn't allow for mortgage, if you ask them?

    I'm not actually cash buyer but am interested in property and if it is just a case of them looking for quick sale I'm ftb so no property chain so may be able to negotiate.

    Until you make an offer and put down a booking deposit and show evidence of funds, you won't be able to find out what is wrong with the title or why a cash buyer is required. The reason for seeking a cash buyer is so that an unconditional contract will be signed with special conditions protecting the vendor from liability for some issue or other. I know of an agent who sold a property at €265k to a cash buyer rather that at €271 to a borrowing buyer. There was nothing actually wrong with the apartment or the title. The owner just wanted to be sure of an early sale.


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    #21
    davindub
    Registered Users Posts: 1,447 ✭✭✭davindub


    cruizer101 wrote: »
    I know thread is bit old but didn't really feel it warranted new thread.

    I saw a house which has cash buyer only in description, but there is no detail of why. Is the seller obliged to tell you if there is some problem regarding planning, title, etc which wouldn't allow for mortgage, if you ask them?

    I'm not actually cash buyer but am interested in property and if it is just a case of them looking for quick sale I'm ftb so no property chain so may be able to negotiate.

    Majority of cash buyer listed properties have issues that prevent mortgage approval usually title, building defects or unlawful extensions. But the only way to find out is to go enquire.

    There are few bargains to be had even when paying cash, so bear that in mind.


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    #22
    James 007
    Registered Users Posts: 962 ✭✭✭James 007


    davindub wrote: »
    Majority of cash buyer listed properties have issues that prevent mortgage approval usually title, building defects or unlawful extensions. But the only way to find out is to go enquire.

    There are few bargains to be had even when paying cash, so bear that in mind.
    Where is your data regarding this. The seller may want to upgrade/down grade and when their offer is accepted they may want a quick sale. I dont believe there is data out there to verify what you are saying. Unlawful extensions can be + or a -.


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    #23
    Fol20
    Registered Users Posts: 3,624 ✭✭✭Fol20


    James 007 wrote: »
    Where is your data regarding this. The seller may want to upgrade/down grade and when their offer is accepted they may want a quick sale. I dont believe there is data out there to verify what you are saying. Unlawful extensions can be + or a -.

    i dont have data but talk about it from experience of viewing a lot of places. Yes sellers generally prefer a cash buyer and if both were offering same amount, i would hands down take the cash buyer. The main element here is when they advertise as cash buyers only. This normally means the property is more than likely not mortgageable in current state.


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    #24
    Moomintroll99
    Registered Users Posts: 79 ✭✭Moomintroll99


    Have you had a look at the title? If it's registered here: https://landdirect.ie you will be able to buy an electronic version which might shed some light.

    It doesn't cover everything but it will tell you if there's a mortgage for example, or sometimes if there are boundary issues and things like that. It costs €5 but I have bought several during our house hunt & sometimes it's been immediately clear what the problem is. One auction property we were looking at had a little triangle of contested land in the backyard where it wasn't clear who owned it. Another one had leasehold tenure only with a very short 33 year period left on it, which would have been fine for a cash buyer as you just apply for the freehold from the council, but banks would not lend on it.

    Not all properties are in this system though.


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    #25
    davindub
    Registered Users Posts: 1,447 ✭✭✭davindub


    James 007 wrote: »
    Where is your data regarding this. The seller may want to upgrade/down grade and when their offer is accepted they may want a quick sale. I dont believe there is data out there to verify what you are saying. Unlawful extensions can be + or a -.

    I don't believe there is anything to stop you investigating for yourself? You can attend viewings, search for planning issues or investigate titles without actually purchasing a house.

    I can tell you from attending viewings that were marked cash only, everyone of them had issues that would prevent a mortgage from being taken on the property.


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