The Lemon Fool

I'm selling a house and a potential buyer made an offer, saying it was a "cash" offer.
My estate agents are now saying it will be a "remortgage" offer (the potential buyer wants it for buy-to-let).

What's the difference between the two, and is it correct/truthful/accurate to describe their "remortgage" offer as a "cash" offer?

Instinctively no.

But I guess it really depends - if they're remortgaging another property in their portfolio to then buy your house with cash (such that there will be no charge on your sold property when they buy it), I'd argue that would be seen as a cash purchase.

(In effect, that re-mortgage can occur independently of whether they do purchase or don't purchase your property).

If there is going to be a charge on the property, then I'd say that isn't a cash purchase.

zico wrote:I'm selling a house and a potential buyer made an offer, saying it was a "cash" offer.
My estate agents are now saying it will be a "remortgage" offer (the potential buyer wants it for buy-to-let).

What's the difference between the two, and is it correct/truthful/accurate to describe their "remortgage" offer as a "cash" offer?

Cash already in a bank account

Cash to be borrowed against another asset (property) and then put in a bank account.

Both are "cash" offers for your property. The distinction is usually the availability, or not, of that cash, and the speed of access to it. A non-cash offer typically refers to a situation where there will be a chain and the proceeds of their house sale in that chain provide the means to purchase yours.

Thanks for that reply. Is a "remortgage" option likely to delay the house sale, or would you expect that to be sorted out before the other processes of buying/selling? Presumably a "remortgage" application isn't guaranteed to be accepted either?

If they've got a mortgage offer on the remortgage then it won't be rejected (broadly speaking as there's a commitment to lend at that point).

As an example, I'm currently going through a remortgage on a BTL at present. I have the mortgage offer and I'm (very marginally) increasing the amount borrowed. That mortgage offer is valid for 6 months so I could take it anytime between now and circa December.

If I were looking to buy another property, and use some of the monies from the remortgage, I would only advance the remortgage when my offer etc had been accepted on the new property - I wouldn't want to be paying interest on the increased lending until I knew I had somewhere to deploy it.

I'd suggest there is no formal status of "cash offer".

By "cash offer" people usually mean an offer is not subject to the process (and risk of delay/rejection) of obtaining a loan to finance the purchase.

I once made a "cash offer" on a house. Then while the legals were progressing I applied for a mortgage. The estate agent rang me in a steaming rage when the lender's surveyor rang to arrange a valuation, assuming I'd lied about not needing a mortgage. I showed him a bank statement with a balance comfortably higher than the purchase price to reassure him i was just getting my cash back out of the deal later and completion was not subject to the mortgage application being approved, and he calmed down a bit. I was very surprised at how important it was to him. Or maybe to the seller.

I think me being dressed like a scarecrow the day I made the offer may have misled him a bit...

I suspect it means no chain.

They might have planned to use cash but have since changed their minds and would prefer to have a mortgage and keep access to the cash. I would assume they know they can get a mortgage and it shouldn't delay the purchase. They might want to keep the cash for improvements/extensions

I have done the same previously as taking a mortgage offered a bit more flexibility.

When we made a 'cash' offer the EA asked us for proof of funds.

We had the cash in the bank, however a good chunk of it was from remortgaging out existing property, but as the loan rate was 0.7% and I could get 1.2% on a 30 day notice account we'd already activated the loan. Note here there was still a 30 day period for getting the money out, but that was fine as the cash existed.

I would hope the EA had seen proof the funds were readily available, probably quicker than in our case.

EDIT - if they are remortgaging, probably more pressure on them to complete before their mortgage offer expires.

Paul

**Estates Agent being economical with the truth alert**

Yes, "cash offer" is often stretched these days to imply that the buyer isn't part of an ongoing chain, not that they don't have a mortgage arrangement. No wonder we view the EA profession so dismally in this country.

zico wrote:I'm selling a house and a potential buyer made an offer, saying it was a "cash" offer.
My estate agents are now saying it will be a "remortgage" offer (the potential buyer wants it for buy-to-let).

What's the difference between the two, and is it correct/truthful/accurate to describe their "remortgage" offer as a "cash" offer?

I wouldn't get too hung up on the terms "cash offer" and "re-mortgage".

Instead, your agent should be telling you about the buyer's ability to proceed. Is it dependent on the sale of another property? If there's a re-mortgage involved, is there an offer of mortgage in place. Etc, etc.

When you understand your agent's assessment of the buyer's ability to proceed, you will be in a better position to decide whether the buyer's offer is one you want to accept.

modellingman

vand wrote:**Estates Agent being economical with the truth alert**

Yes, "cash offer" is often stretched these days to imply that the buyer isn't part of an ongoing chain, not that they don't have a mortgage arrangement. No wonder we view the EA profession so dismally in this country.

It isn't a 'profession'. 'House salesman' might be a more accurate term