Buying a house in cash? That’s great! There are a lot of benefits to paying in cash, including a strong negotiating position and the possibility of a much faster closing. Still, what should you expect from a cash transaction closing? Here’s what you need to know.
Closing a home can take a long time, but that’s usually because of the mortgage lender’s process. When you’re paying for a home in cash, you can shorten the closing time quite a bit.
There are still a lot of things you need to do, such as inspections and negotiations that result from them. However, once all of the contingencies are satisfied, it’s time to go to the closing table.
If you’re looking to buy your dream home, you want to make sure you have a buyer’s agent on your side to help you find the right home and get the deal you’re looking for. Contact Clever to learn how an agent can help you today!
The Cash Sale Process
What does it take to purchase a home in cash? There are several steps to the process.
First, you make your offer. Make sure your buyer’s agent is aware that you’re making a cash offer so they can help you negotiate. Often the certainty of a cash sale means that you can offer a lower price. The seller won’t have to worry that the deal will fall through.
Second, you have to provide proof of funds. This assures the seller that you really do have enough cash to complete the transaction. Your bank can provide a proof of funds letter for you to give the seller’s agent.
Next, you’ll need to work through title and escrow companies to get liens cleared and paperwork finished. You’ll also want to get a home inspection done and you may need to negotiate repairs.
Finally, you’ll head to the closing table.
The Timeframe for a Cash Closing
The most time-consuming part of the closing process is due diligence by the lender. Having a cash offer can speed things up, bringing the closing time under 30 days.
However, you may still have the usual 30–45 day closing time if the home seller needs to close on another home before they can move out. You can’t immediately assume that the closing will go faster, but certainly the delays and obstacles you have personally can be reduced.
If the inspection turns up repairs that need to be made, you can set the deadlines on that yourself, or ask for a price concession from the seller to move things along.
How You Pay for the Purchase
As much fun as it might be to show up at the closing table with a briefcase full of cash, you are actually expected to wire the money from your bank to the seller’s bank. In some cases, you can pay by cashier’s check instead.
Of course, the most important part of the transaction is to make sure the cash is transferred shortly before the date of closing. If you need to sell securities or convert bonds in order to make the purchase, be sure to allow time for that.
Ask your bank how long the wiring process takes to complete so that everything is finished and nothing goes wrong at the closing table.
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Paperwork to Expect at Closing
Paying in cash allows you to skip a lot of the mortgage and lender’s documents, but there is still a lot of legal paperwork required.
The settlement statement is a detailed accounting of all the money involved in the deal. It will have all the amounts everyone has agreed upon. This includes the sales price, pro-rated tax and utility bills, and much more. You’ll want to carefully go through this document line by line to make sure there are no errors.
You’ll also have the deed, the bill of sale, the affidavit of title, and documents that declare tax obligations. You may also have additional documents to sign from the title company and escrow company.
The good news is that you don’t have to worry about wading through a mountain of mortgage paperwork!
Buy Your Dream Home With a Great Buyer’s Agent
If you’re looking to purchase your dream home, you want to make sure you have a great buyer’s agent on your side, especially if you’re making a cash offer. The truth is that you have a lot of leverage when you pay in cash, but without a great agent, you might not know how to take advantage of it.
Choose to work with someone who can help you negotiate the best deal along with helping you find the house you’ve dreamed of. To connect with a highly rated agent who is experienced in your area, reach out to Clever today.