Recent surveys have shown sellers are willing to offer significant discounts to cash buyers. But by how much varies by region.
However, most property investment experts agree cash buyers gain considerable advantages.
Big discounts on offer for cash
According to estate agent comparison site, GetAgent.co.uk, sellers have been slashing asking prices by as much as £150,000 to cash buyers. Their data reviewed current properties listed on major property sites and compared the listed price against the price that was agreed with a cash buyer.
The analysis showed sellers who wanted a ‘cash sale only’ listed for an average asking price of £186,768. This is compared to an average asking price of £256,373 for the market of buyers dependent on obtaining a mortgage. This means cash buyers were attracting discounts of almost £70,000.
A study carried out by Jackson-Stops estate agents, who used Land Registry data, obtained similar results. Their findings found that cash buyers were able to get the best discounts, although their figures varied by region.
They found cash buyers saved 8% compared to the average house acquired in a mortgage transaction. Interestingly, the data found that cash buyers were spending more than ever to secure properties – spending £21,384 more than they did a year ago. Yet those purchasing with a mortgage ended up paying high prices, spending £25,347 more than last year.
Discounts for cash buyers by region
There were variations by region as to how much discounts cash buyers enjoyed. London saw the largest cash buyer discounts as well as the south east, where the average list price for cash buyers was £82,690 less than the general average asking price.
In the south west, this figure was £70,000 less and in the east of England, £68,945 less. The Land Registry data showed that cash buyers in the north west of England negotiated prices 10% less than the average property price in the area. In the north east, cash buyers enjoyed discounts of up to £35,599.
The advantages of a cash sale
A cash sale benefits both buyer and seller in terms of time savings. Rapid mortgage rate rises alongside offers expiring and not being reissued have caused major delays in transactions. This means that the national average is now 132 days per transaction.
A cash buyer is able to remove these obstacles, significantly cutting transaction times.
Chairman of Jackson-Stops, Nick Leeming, commented, “It’s a cash buyers’ market. Not only are they pipping some mortgaged buyers to the post, but they’re often able to give sellers the quick sale that they are after in today’s less than certain mortgage market. A large proportion of today’s cash buyers are equity-rich baby boomers deciding that now is the time to downsize and live retirement with fewer bills and more financial agility. We expect this trend to continue as the UK market demographic goes through a significant shift, in which soon one in four people will be over 65. Many of these homeowners are choosing to take their next steps now and make a purchase that better reflects their future needs. These are lifestyle driven cash buyers who’ve typically built-up equity in the family home over several decades.”