Home sellers willing to accept larger discount for the benefits of a cash buyer

Home sellers are willing to accept a larger discount in exchange for the benefits of selling to a cash buyer, according to new research from a mortgage company.

According to MPowered Mortgages, cash buyers receive an average discount of 9.3% compared to buyers relying on mortgages to fund their purchase. In the North West of England that level of discount rises to 13.4%.

Stuart Cheetham, chief executive of MPowered Mortgages, said: “Two factors explain the power cash buyers have to pay less for the home they want – scarcity and speed.

“As the property market heats up and interest rates fall, the number of househunters using a mortgage to fund their purchase is surging and cash buyers are becoming relatively rarer.

“Then there’s the trump card that cash buyers can play – speed. Rising demand is making a slow process take even longer, and the average seller in England and Wales now has to wait 152 days between accepting an offer and completing their sale.

“That’s why buyers who have their finance fully in place when making an offer are vastly more proceedable – ie. attractive to seller – than those who don’t. Sellers will often accept a lower offer in return for the extra certainty these buyers represent.”

Danny Luke, Quick Move Now’s managing director, commented: “Homeowners are obviously becoming wise to the benefits cash buyers offer over and above a buyer relying on mortgages, as evidenced by their willingness to accept a bigger discount.

“Whilst owner-occupiers buying with cash offer speed benefits over those purchasing with a mortgage, legitimate cash-buying companies are able to offer an even greater level of speed with significant added certainty.

“Unfortunately, 28.8% of property sales fell through before completion in 2024. More than 50% of those failed sales were due to the buyer changing their mind or pulling out of the sale after the property survey. Someone buying with cash doesn’t mitigate this risk, unless they are a professional cash-buying company.

“We specialise in quick house sales. We’ve directly bought and sold more than 6,000 properties since 1998 – it is what we do all day, every day – so we have robust processes in place that enable us to provide quick and guaranteed property sales. We can complete a sale just seven days after offer acceptance if required. That’s 145 days (almost 5 months), on average, quicker than on the open market.

“As a business, we obviously can’t pay full market value, but the data from MPowered Mortgages and our own experience with our customers show that people understand why that’s the case. As a business, we have to pay 5% more stamp duty than a normal owner-occupier purchasing a main residence. We also take on all the costs of owning the property before we re-sell it and take on the risk of how long it will take to sell and the price it will achieve.

“You can expect any genuine direct cash home-buying company to apply a discount of around 17% in the current market. Whilst this is a greater discount than MPowered Mortgages suggest the average owner-occupier cash buyer achieves, our extensive experience and the added speed and certainty we’re able to offer over and above an owner-occupier make it a service that simply cannot be matched elsewhere.”