Being a cash buyer : advantage or disadvantage in Irish market

mkdon

Might be a silly question but is cash king when it comes to buying property in Ireland?
 
What are the benefits and advantages of being a cash buyer in the irish housing market?
 
Does it speeden the transaction,
Cheaper surely
If need to offload it is leveraged
 
Does this translate to the Irish housing market in reality?
 
Iwhat are the cons?
 

Any advice welcome

johnnyskeleton

The main benefit is that you are rich and can spend your money as you please as opposed to having to repay a loan for 25 years!

But as regards any competitive advantage, if you have a load of cash and someone is relying on a mortgage, you can pay more thus secure the property. Thats the main advantage.

A few years ago when banks were giving approval in principle but then backing out cash buyers were preferable to mortgage buyers.

Unencumbered cash buyers are also preferable to someone in a chain sale, but not significantly more so than a mortgage FTB.

Finally, cash buyers can buy properties with problems such as pyrite that banks will not lend for. Also useful for auctions, self builds and serious renovation jobs, though Im not sure that those are benefits so much as risks/potential opportunities.

So there are a few competitive advantages to being a cash buyer, but in reality an agent will advise their client to go with a higher bid from a mortgage purchaser rather than take a significantly lower bid from a cash buyer.

LirW

We ended up buying in cash and while it worked out perfectly fine, nowadays it doesn't make too much of a difference because there is high demand and the vendor can go with the highest bid.
It's also not said that you're automatically faster because of it. When the other side causes delays there's little you can do. Took us 10 weeks from Sale agreed to keys.

The real advantage is that you don't have a mortgage to pay and that in itself is beyond amazing. You never have to worry about not being able to pay your mortgage and you can move on a lot easier if your circumstances change.

Also as the previous poster said it gives you the chance to look for houses that a bank wouldn't touch. They're mostly not bad houses, just have certain issues like messed up deeds, planning issues etc.

Also one personal advice: Don't tell your surveyor or anyone to carry out inspections that you're buying cash. Some of them don't see the necessity to do their job properly in that case.

jimmycrackcorm

The big disadvantage in being a cash buyer is not throwing it into bitcoin

the_pen_turner

my mother was heling someone sell their house last year.
2 people made offers on had to sell their own house and one had cash. the cash guy offered the asking and the other 10,000 more.
they went with the cash buyer. that 10,000 isn't worth the hassle of dealing with all the extra stress. the cash buyer just paid up and there was no risk of getting stuck on the market for months

mkdon

I think the EA wants the most for the house as poss so doesnt care whether cash buyer or not. Hence why I would think this only matters in a private sale treaty? Thoughts? Is there somewhere where one can find Houses that the banks will not lend on… and those houses selling privately / not using EAs (out of interest)

Wesser

Mk you are very worked up about EA s and you need to let it go. It is the vendor who Decides who gets the house. It is the vendor who decides wether to go with the mortgage buyer or the cash buyer. Not the EA. The EA just does what they are told. Often the vendor will pick a cash buyer because it is easier as detailed above.

No there are no other fancy hidden lists of properties.

mkdon

Wesser wrote: »

Mk you are very worked up about EA s and you need to let it go.  It is the vendor who Decides who gets the house. It is the vendor who decides wether to go with the mortgage buyer or the cash buyer. Not the EA.  The EA just does what they are told. Often the vendor will pick a cash buyer because it is easier as detailed above.

No there are no other fancy hidden lists of properties.

The EA will give their "professional" advice on going for a larger offer rather than a lesser cash offer, regardless of this being cash or not. That is my point.

mkdon

LirW wrote: »

We ended up buying in cash and while it worked out perfectly fine, nowadays it doesn't make too much of a difference because there is high demand and the vendor can go with the highest bid.
It's also not said that you're automatically faster because of it. When the other side causes delays there's little you can do. Took us 10 weeks from Sale agreed to keys.

The real advantage is that you don't have a mortgage to pay and that in itself is beyond amazing. You never have to worry about not being able to pay your mortgage and you can move on a lot easier if your circumstances change.

Also as the previous poster said it gives you the chance to look for houses that a bank wouldn't touch. They're mostly not bad houses, just have certain issues like messed up deeds, planning issues etc.

Also one personal advice: Don't tell your surveyor or anyone to carry out inspections that you're buying cash. Some of them don't see the necessity to do their job properly in that case.

just on the last note why would the surveyor / inspector not do their job properly if one informs them of this?

pwurple

mkdon wrote: »

The EA will give their "professional" advice on going for a larger offer rather than a lesser cash offer, regardless of this being cash or not. That is my point.

Eh, not necessarily. We were a cash buyer... not the highest bid. Vendors accepted us because they wanted a quick stress-free sale. (Messy divorce)


Circumstances differ.

Fol20

mkdon wrote: »

The EA will give their "professional" advice on going for a larger offer rather than a lesser cash offer, regardless of this being cash or not. That is my point.

Are you speaking from experience, it doesn’t sound like it. Speaking from a sellers point of view, the estate agent will give their opinion but at the end of the day it’s the vendors decision. Some may take the risk for an extra few k but as others have said, cash buyers can take out a lot of the hassle involved and close quicker

Graham

mkdon wrote: »

What are the benefits and advantages of being a cash buyer in the irish housing market?

1) you can move quickly. You're not beholden to a mortgage provider for secondary approval..
2) because no bank is involved, you've probably halved the communication/legals. Speeds things up further
3) because of 1) and 2) many buyers prefer you.
4) because of 3) you may not necessarily need to be the highest bidder.

mkdon

But the cash buyer is in best position if dealing directly with buyer I feel..... is there sites other than my home or daft that can communicate and negotiate with a buyer directly ?

C3PO

mkdon wrote: »

I think the EA wants the most for the house as poss so doesnt care whether cash buyer or not.

That doesn't make sense to me!
I would have thought that most EAs would be keen to get a sale completed as soon as possible, get their commission and move on to the next house and would therefore be keen for an owner to accept a cash offer? An uplift of €10k in a sales price actually means very little if you are only achieving 1-1.5% of it, particularly if there is a delay involved!

Cheshire Cat

C3PO wrote: »

That doesn't make sense to me!
I would have thought that most EAs would be keen to get a sale completed as soon as possible, get their commission and move on to the next house and would therefore be keen for an owner to accept a cash offer? An uplift of €10k in a sales price actually means very little if you are only achieving 1-1.5% of it, particularly if there is a delay involved!

Exactly, time is money, too!

beechwood55

House near me has been sold to a cash buyer. There is a serious issue with an extension not complying with planning permission. No bank would touch it.

davo10

Op, one disadvantage of cash purchases, not oft considered, is the absence of a mortgage payment protection policy. I have made cash purchases, and I have always taken out a term assurance policy for the same amount.

The reason for this: if you are married, and either of you is unfortunate enough to suffer an early demise, your mortgage is paid off in full by your insurance, this could be hundreds of thousands of Euro, that is a significant benefit. If you are a cash buyer and don't take out insurance, then that benefit does not exist.

The_Conductor

One disadvantage of being a cash buyer (and I don't mean physical cash) is either solicitor may be obliged to report the transaction to Revenue- who may decide to investigate the source of the funds (regardless of whether its entirely legitimate, or not). Enough solicitors have been badly rapped by Revenue lately- that the current rule of thumb is expect a phone call from Revenue and a short discussion on the source of the funds- when buying with cash..........

LirW

mkdon wrote: »

just on the last note why would the surveyor / inspector not do their job properly if one informs them of this?

Because you'd need a survey for the bank for various reasons. A bank won't lend you if the surveyor discovers something that's seriously wrong with the house, for example pyrite issues.
If the surveyor knows you're buying in cash all of that wouldn't apply, since you're not depending on the bank.
I got badly burned with that unfortunately.


Also regarding highest sales price, that's not necessarily true. Some people need a quick sale and if the vendor has all the paperwork together (which means holding the deeds) you can close a lot faster with a cash buyer. In that case it's worth to take a bit less for a sale that goes through within a month.


I agree with Conductors statement, take care that your funds are clean. You will most likely get questions from your solicitor or Revenue. We had to explain our finances for this very reason to the solicitor.

Graham

LirW wrote: »

Because you'd need a survey for the bank for various reasons. A bank won't lend you if the surveyor discovers something that's seriously wrong with the house, for example pyrite issues.
If the surveyor knows you're buying in cash all of that wouldn't apply, since you're not depending on the bank.
I got badly burned with that unfortunately.

That sounds more like you got a crap surveyor than anything relating to method of financing.

LirW

Graham wrote: »

That sounds more like you got a crap surveyor than anything relating to method of financing.

I'm not denying that, I managed to hire the worst of the worst. But I think my statement most likely didn't do the whole thing a favour.
Rule of thumb is: Keep your finances to yourself unless your solicitor or Revenue has questions.

Graham

mkdon wrote: »

But the cash buyer is in best position if dealing directly with buyer I feel

I'd disagree with your sentiment. A cash buyer is pretty much always going to be at an advantage regardless of any intermediary.

mkdon wrote: »

is there sites other than my home or daft that can communicate and negotiate with a buyer directly ?

None really worth bothering with.

Askthe EA

mkdon wrote: »

The EA will give their "professional" advice on going for a larger offer rather than a lesser cash offer, regardless of this being cash or not. That is my point.

Huge (and incorrect) assumption. We will present all offers to our client and will recommend what in our professional opinion is the best suited offer. In 9/10 cases that is the highest bid.

There are other considerations though which depend on our clients needs. For instance, if they are trading up, a lower offer from a cash buyer is preferable as it is a cleaner sale which allows a quicker timeline for my client to move on.