The Process For An All-Cash Deal
The real estate closing process can be complicated, regardless of whether you are a first-time buyer or an experienced seller. There are many parties involved in the closing process, including the buyer, the buyer’s agent, lenders, and an escrow company. Sometimes, there is even a real estate lawyer.
Cash offers are easier than traditional methods. There are fewer parties involved, paperwork is shorter, the timeline is faster, and there is less chance of the deal failing.
What Is An All-Cash Offer?
A cash deal is when someone purchases a house in full, without financing. They can either transfer funds electronically or use a cashier’s check to close the deal.
Two types of buyers typically offer all-cash offers: Individual buyers who plan to live in the property themselves, purchasing without the assistance of a bank, or real estate investors are known as iBuyers.
A buyer will review basic details about your home, send you a market value, complete an onsite assessment and make an official offer based on numerous data points. Acceptance means that you can close quickly and without ever having to actually list your home.
What Is The Typical Timeline For Closing Real Estate?
Closing Date For All-Cash Purchases
Cash purchases are easier to close because there is no lender involved. A cash sale can be closed in as little as two weeks once you have signed the contract. This is enough time for title and escrow to clear any liens and provide insurance, and to get paperwork prepared (more later).
Closing Time For A Financing Purchase
A typical closing time for a financed buy (one in which the buyer takes out a mortgage on their home) is around 30 days. The buyer and seller may also agree to a closing time of 45 or 60 days. These are usually chosen to coordinate with relocation plans and other real estate purchases.
The Selling Process When It’s A All-Cash Deal
1. Sign The Contract
Accepting the buyer's offer is the first step to closing. Next, you must complete a Purchase and Sales Agreement contract. Also known as "going under agreement,"
2. Verify That Proof Of Funds Is Available
You need to verify that your buyer has the funds to complete the transaction. You will typically ask for earnest money upfront (usually between 1-2 percent of sales price) and demand proof of funds in the form of investment or bank statements. This can be done with the assistance of your real estate agent.
3. Hire Title And Escrow Companies
You might choose to work with the company or the buyer, depending on where you live. The title company is responsible for ensuring that property lines are correctly drawn and there are no property lien issues, issuing title insurance, as well, as ensuring that property ownership changes on closing day. The escrow company manages all closing documents and facilitates the transfer of funds. They also complete the legal paperwork that records the sale. Sometimes, the same company can handle both title and escrow tasks.
What Is A Property Lien? A Property lien is a legal notice regarding an unpaid debt. A lien may be placed on your house until you pay the unpaid debt. This can include child support, taxes, settlements for court cases against you or contractors who have done work for you. The bottom line is that you can't sell your house until all liens have been cleared. It's up to the title company to ensure there aren't any liens remaining before closing.
4. Pass The Home Inspection
It's common for buyers to submit their offer with an inspection contingency, which is an addendum that states that they will pay to have an inspection done, but they have the option to request repairs or renegotiate the agreed-upon sale price based on findings. After this negotiation is completed, you are ready to close.
5. Read And Sign The Closing Documents
It's the closing time! A mountain of paperwork is almost a guarantee when you deal in cash. Here are the documents you can expect to see and sign.
Last Closing Instructions:
Closing instructions can be signed at the time your escrow account opens. However, if you have not signed them yet, it's a good idea to do so now. This is basically a list of all the tasks that your escrow company will be responsible for and the steps they'll take to close your account. Double-check all amounts.
Settlement Statement For HUD-1:
The HUD-1, which is required by federal law, provides a detailed accounting for all money involved in the transaction. This includes all the details you have negotiated to date, including sales price, payoff balances, and pro-rated taxes and utility bills. This form will be useful for taxes. You should have your closing agent read through each line before signing so that you can spot any errors.
Certificate Of Title:
You sign this document to confirm that you are authorized to sell the property.
Title Deed:
Deed the paper that transfers ownership to the new owner. It will be signed at closing. However, your transaction will only be closed once it is recorded at the county courthouse.
Statement On Loan Payoff:
If your property is subject to a mortgage, this document will show how much you owe your lender at closing. This should be equal to the amount that the escrow company will pay you.
Mechanics Liens:
You swear that no other liens are placed on your property by contractors or laborers.
Bill of Sale:
These items will be listed if you and the buyer have agreed to any additional items -- such as a backyard swing set or a specific piece of furniture.
Statement Of Closing Costs:
You are stating that you were informed about all fees and closing costs before signing this document.
Statement of Information:
Simply put, you swear you are who you claim to be.
What Are The Steps To Closing A Cash-Real Estate Deal?
To your signing appointment, bring the following items:
Your government-issued ID.
If your home has been paid off, the deed.
Garage door remotes and house keys can be used to access keyless entry systems and alarm systems.
To cover any unpaid costs, such as property taxes or lien payments, a certified or cashier’s check is required. If you need additional funds, your escrow company will let you know.
