FEBRUARY 25, 2019 | BY A & S Property
What’s the typical discount for making a cash offer on a property?
Vendors will often accept an all-cash purchase offer over a higher-priced offer with a mortgage, highlighting the importance of cash in powering the market for property.
With stretched affordability and historically low mortgage borrowing rates, it is unsurprising that mortgage sales volumes across the nation are 138% higher than cash sales volumes. But fresh research shows that buyers who do not take out a mortgage when purchasing property can typically expect to pay 9% less on average, suggesting that cash remains king in the buy-to-let market.
House price data and sales volumes sourced from Land Registry Mortgage/Cash data reveals that across Great Britain, cash-based buyers pay less than those acquiring property with a mortgage, with the exception of London.
The capital is the only region where cash property prices are higher than mortgage property prices.
By region, the gap is highest in the North East where mortgage funded house prices are 14% higher than those purchased with cash.
Buy-to-let landlords purchasing property in Falkirk can typically expect to make the biggest savings, with mortgage buyers paying 32% more on average than cash buyers.
North Lanarkshire (26%) and Renfrewshire (25%) are also amongst the highest.
Hartlepool is the largest gap in England at 25%, East Renfrewshire, East Dunbartonshire, Preston, Middlesbrough, Burnley and St Helens also make the top 10.
Although placing 18th in Great Britain, Newport is home to the highest Welsh gap in mortgage and cash buyer house prices at 16%.
Although only the 83rd largest gap overall, Sutton is home to London’s largest gap with mortgaged fuelled house prices sitting 10% higher than those purchased with cash in the borough.
Alastair McKee, managing director of One77 Mortgages, said: “Many home sellers will be drawn to a cash buyer as it can often mean a quicker, smoother selling process with less paperwork and no onward chain, which can be hugely appealing to someone that needs a quick sale in particular.
“However, savvy buyers will know that they are in this stronger position and as a result they will often negotiate more off the asking price than they otherwise would, with the seller tending to accept it, resulting in a lower sold price achieved. I myself sold my last property at £100,000 below asking price to a cash buyer due to the greater convenience of doing so as I was lucky enough to be in a strong position due to my onward purchase, so I can certainly understand the appeal.
“When considering which works best for you it’s really down to priorities. If you need to sell quickly then a cash buyer is the way to go, but if the sold price is more important, it’s worth holding out for an offer at full asking price.”
Article courtesy of Landlord Today | Sign up for Landlord Today newsletter | Get this news on YOUR site!