Advantages of being a cash buyer?

Moomintroll99

Hi there

We have recently relocated to Ireland from Australia & are looking to buy a place.

Through luck rather than genius, we have a decent amount of cash. We owned our Aussie house for 10 years, renovated it ourselves etc so got some good growth - our falling apart pokey terrace in a sketchy neighbourhood became a characterful inner city pad in that time.

We haven't been in Ireland 2 years so wouldn't get a mortgage anyway, but I am loving the idea of being mortgage free. This house was our only asset and now we want to buy a family home with a little stash left over for emergencies.

That other thread about the negative equity vendor not actually having permission to sell gave me the horrors. I am so new to the situation here & would appreciate a bit of advice to help get my head around it & avoid pitfalls and also maximise what advantage we are lucky enough to have.

I get that being a cash buyer might be advantageous in the current situation here, but how exactly? Is it just because you can move faster or what?

Would appreciate any words of wisdom from the better informed.

thebeerbaron

Well you wont pay any interest on the amount you would normally borrow so potentially you would save tens of thousands of €.
With no mortgage you will be able to move and offer alot faster.

Alkers

And no need for the bank to be involved in any aspect of the sale

o1s1n

Simona1986 wrote: »

And no need for the bank to be involved in any aspect of the sale

On the subject of this, you could potentially then buy a property which a bank won't give a mortgage on.

I was a full cash buyer on my last property and to be honest, it didn't really change very much when it came to actual bidding (and I bid on quite a few). Just made it easier when paying for the property.

the_syco

o1s1n wrote: »

On the subject of this, you could potentially then buy a property which a bank won't give a mortgage on.

I was a full cash buyer on my last property and to be honest, it didn't really change very much when it came to actual bidding (and I bid on quite a few). Just made it easier when paying for the property.

This. I'd be careful in telling the EA that you're a cash buyer, in case they drop a nice looking lemon on you that they can't get rid of, for reasons that they won't mention, but when they do pop up eventually you'll already be emotionally attached to the house.

Land borders, leaseholders and lack of planning are things that may stop a person with a mortgage from buying, but not a cash buyer.

Moomintroll99

Ah so you could potentially buy something that a bank wouldn't lend on?

What kinds of things would make a house not lend-able on-able though?

A place needing a lot of renovation, or half built/unfinished type thing?

Moomintroll99

So just to help my slow Aussie brain:

Land borders - as in disputes over borders/land extent which may mean your neighbour moves the fence in the middle of the night?

Leaseholders - as in non freehold stupid kinds of tenure that will make everything annoying? Is it like those nutty things in the UK where people bought new builds with 'ground rent' that was then sold on to private companies and goes up every year making their houses unsaleable? Does that type of property hell exist in Ireland?

Lack of planning - so like extensions that were done without council planning in place?

CIARAN_BOYLE

Moomintroll99 wrote: »

So just to help my slow Aussie brain:

Land borders - as in disputes over borders/land extent which may mean your neighbour moves the fence in the middle of the night?

Leaseholders - as in non freehold stupid kinds of tenure that will make everything annoying? Is it like those nutty things in the UK where people bought new builds with 'ground rent' that was then sold on to private companies and goes up every year making their houses unsaleable? Does that type of property hell exist in Ireland?

Lack of planning - so like extensions that were done without council planning in place?

Land borders there may be walls in place but the your fence may be slightly into their land or vice versa. If you know where you are and you are prepared to go either way on the extra land great for you but the bank won't give a mortgage unless its fully cleared up.

Leaseholders. Yep its rare though. But it tends to be low and often forgotten.

Yeah thats lack of planning. The banks also won't recognise an attic conversion as a room unless it meets certain criteria which could mean they won't agree to the markets value on a property.

Also properties in need of renovation as you mentioned.

Gumbo

Moomintroll99 wrote: »

So just to help my slow Aussie brain:

Land borders - as in disputes over borders/land extent which may mean your neighbour moves the fence in the middle of the night?

Leaseholders - as in non freehold stupid kinds of tenure that will make everything annoying? Is it like those nutty things in the UK where people bought new builds with 'ground rent' that was then sold on to private companies and goes up every year making their houses unsaleable? Does that type of property hell exist in Ireland?

Lack of planning - so like extensions that were done without council planning in place?

You should still engage a surveyor to do a pre purchase inspection to check these things though.

okiss

Land borders. As you mentioned.
Land borders could also be an issue on maps of an area espically in a country place. For example I know a couple who were buying a site in a country area from a local farmer. The maps of the area did not show fully what he owned. I know they got it sorted with a a solicitor but it cost them money to do this.
In this case also the couple had it put in the agreement for buying the land that it was subject to getting planning permission.

In Ireland and outside town areas most local councils have a planning rule that you have to show local interest - ie why you need to build a house in a particular area ie your farming or have a business locally.
Some councils will also have rule that you have to build a house within a certain time frame or that you can't sell a house that you build for x number of years.

Leaseholders - as in non freehold. Some houses will have a leaseholder that you pay x amount of ground rent to each year. If a lease has say 60 years or less it may be hard to get a mortage on it.
You might be able to buy a cheap house but could have to find a large sum of money within x number of years to buy out the lease. If you find a house like this see what the owner would be looking for to buy out the lease after x period and get this in writing. Get your solicitors advice in regards to this.

Lack of planning - this would include an extensions on the house or an attic that is now being used as a bedroom. If an attic is being used as a bedroom check this was on the plans or permission was got for it.

Another reason why a bank may not give some one a mortage on is that a house is a wreck. A house without a proper kitchen, bathroom or lacking electricty ect could be an issues also.

I would give you the following advice after seeing what friends and family went through buying houses.

1. If you are interested in living in an area - drive around the area at different days and times. Get some one with you and see what you both notice. If you like the look of an area rent in for 12 months and get to know people. Some local knowledge when buying a house can be worth a lot. You can find out if you live in a flood or pyrite area. A local can let you know if the house was slapped up in the boom or if other house in the estate have issues. Living in area for a period of time can show up if it is rough/has social problems/ a lot of noise/ bad neighbours.
Buy the local paper of the area and read it. See if certain areas are mentioned in regards to social problems or individuals living their.

2. If your looking at a house that needs some work doing to it - get a full survey and pay for this yourself. Be ready to find out how much it will cost to get it problems fixed up. Be aware it can take longer than expected and cost you more than you were told.

3. Ask about broadband in the house. Some country areas in Ireland have no or very poor broadband. Some times a house just 2 miles away can have broadband.

I know someone who was looking to buy a family home within 8 to 10 miles of a major city in Ireland. This house needed some work doing to it. The couple in question priced this work and offered x amount for the house taking into consideration the cost of this work. They also made a few local enquires to find out that broadband could not be got in the house.

They decided not to go ahead with buying this house due to the vendor wanting to much considering the work to be done but also due to the broadband issue.
The same couple also looked at other house and saw old boliers that need to be replaced, kitchen's and bathrooms that needed replacing ect. If you have to start to replace things like this don't be affraid to say it to the vendor I will have to spend x amount and because of this I am willing to offer y amount.

Certain areas in Ireland could have a lot of mature or older people living in them. They pass away and their familes or relations then sell the home. These houses can be in a nice area, are older house but are well built but the decor may not be the best. If you looking at a house like this - get a full survey. See what the houses are selling for the areas once they are done up. Don't spend a lot of money on a house that will never sell for more that x amount.

Here is a book that may help you further. It is availble on amazon co.uk
Buying a House in Ireland: A Step by Step Guide by a Builder/Solicitor - by Terry Gorry.

If you move back here and like an area just ask about it here as it is possible someone will know the area and be able to let you know it's good and bad points.

Moomintroll99

Some excellent advice here, thanks all. That book looks worth a look for sure, thanks Okiss.

We're looking in Galway City & thereabouts, so hopefully won't come up against the more weird & wonderful rural stuff like a planning requirement to be an Irish speaking alpaca farmer or anything like that.

Seems I need to find a perfect house with a 1-foot border dispute in the back yard and a DIY attic conversion up top ruling out mortgage funded purchases, survey it to death, don't admit anything about anything to the real estate agent, don't spend any money on the property unless the keys are in hand, wait to go sale agreed, find out the bank was never going to release the place anyway, feel awful, find another place, repeat, that falls through, then lucky last one works out and we're in by Christmas 2017.

It's like a new and addictive extreme sport....

Fian

Moomintroll99 wrote: »

Some excellent advice here, thanks all. That book looks worth a look for sure, thanks Okiss.

We're looking in Galway City & thereabouts, so hopefully won't come up against the more weird & wonderful rural stuff like a planning requirement to be an Irish speaking alpaca farmer or anything like that.

Seems I need to find a perfect house with a 1-foot border dispute in the back yard and a DIY attic conversion up top ruling out mortgage funded purchases, survey it to death, don't admit anything about anything to the real estate agent, don't spend any money on the property unless the keys are in hand, wait to go sale agreed, find out the bank was never going to release the place anyway, feel awful, find another place, repeat, that falls through, then lucky last one works out and we're in by Christmas 2017.

It's like a new and addictive extreme sport....

I thin you should be explaining to Estate Agents you are a cash buyer. the primary advantage from their point of view is that there is no risk that the sale will fail because "approval in principal" is not followed through with formal mortgage approval by the bank or because a property they want to sell first does not close.

This can and does lead vendors to accept a lower offer from a cash buyer over a higher offer from someone who needs to mortgage.

Two other invaluable sites:
http://www.floodmaps.ie/View/Default.aspx
Banks won't give mortgages on uninsurable properties due to food risks/having been built on flood plains

And for aspect... more important in cold northerly Ireland than down under
http://www.findmyshadow.com

Moomintroll99

Ha ha yes - Down Under we might calculate where the shade is in order to rush over and sit down in it...

Flood map! Excellent. I saw the pics of storm surges in Salthill & river floods in Galway from a couple of years back - very handy info, thanks.

Moomintroll99

I thin you should be explaining to Estate Agents you are a cash buyer. the primary advantage from their point of view is that there is no risk that the sale will fail because "approval in principal" is not followed through with formal mortgage approval by the bank or because a property they want to sell first does not close.

This can and does lead vendors to accept a lower offer from a cash buyer over a higher offer from someone who needs to mortgage.

Oh really?

So if a property has an asking price of say €300k, does that mean I can come in and say 'I have a cash offer of €280' and that will be attractive just cause it is cash?

Asking prices in Galway seem a bit elastic TBH, some seem to go for well over and some for well under. And the Daftdrop site makes me think some vendors get an offer and then up the asking price - I presume that's what all the +10% ones are? Does that mean it's better not to make an offer quickly after something is listed?

CIARAN_BOYLE

Moomintroll99 wrote: »

So if a property has an asking price of say €300k, does that mean I can come in and say 'I have a cash offer of €280' and that will be attractive just cause it is cash?

It depends, if the seller is in a chain (ie waiting to sell so they can buy) cash could be very attractive as they can finish quickly. If not it would make no difference.

Graham

Moomintroll99 wrote: »

So if a property has an asking price of say €300k, does that mean I can come in and say 'I have a cash offer of €280' and that will be attractive just cause it is cash?

Probably not but your €300k cash offer is likely to be more attractive than a €300k mortgage-backed offer.