Buying a house with cash has many benefits.You do not have to worry about credit checks or the mortgage approval process.Buying a house for cash isn't as easy as offering the owners a suitcase full of bills.The closing procedures need to be completed.You want to make sure you leave enough money to cover homeowner's insurance and property taxes when you own a home.
Step 1: Determine how much money you want to spend.
Setting a target is important whether you've been saving for a while or are budgeting to buy a home in the future.You can find average prices for the type of home you want to buy.The housing market is moving so keep an eye on it.You can bet that $300,000 won't buy the same house in 10 years, even if you save up for it.If you have money saved up, look at your budget to see how much you can spend.In the event of an emergency, you don't want to deplete your savings completely and have no money left for basic living expenses.
Step 2: There is an account for closing costs, taxes, and additional expenses.
There are many costs associated with buying and owning a home, even though you're buying a house for cash.If you didn't figure them into your budget from the beginning, these costs can add up.If you're buying with cash, expect closing costs to be about 3% of the purchase price.If you want to buy a $300,000 house, you should have at least an additional $9,000 for closing costs.If you're buying a house with cash, you should still have homeowner's insurance.This usually involves paying a monthly premium.Depending on the location and size of the house, your deductible, and the types of coverage you want, the amount will vary.If you're buying a condo or house in a planned community, you may need homeowner's insurance.The location of your house and the size of the property affect property taxes.You can check with your county tax assessor's office to get a general idea of property tax rates in areas where you plan to look for a house.
Step 3: Move your funds to a different account.
Once you've determined your source of funding and the amount you want to spend on a house, take that money and set it aside.Once you find the house you want to buy, you can open a basic savings account that will give you quick and easy access to the money.If you're ready to buy a house within the next 2 to 3 months, don't put your house-buying funds in an investment account.
Step 4: You should document your source of money.
If you want to buy a house for cash, you need to be able to show where the money came from.Large cash transactions are subject to a number of federal laws that are put in place to protect against money-laundering and other crimes.These transactions will appear in your bank statements if you have been saving money regularly.If you've recently received a large amount of cash, keep the legal documentation showing you came by that money legitimate.If you've been putting money in a bank account, it's a good idea to do it as soon as possible.You should wait 60 to 90 days before buying a house if you deposit large sums in a bank account.Don't use the money from the account to pay bills in the meantime.
Step 5: Evaluate the market in different neighborhoods.
It's possible that you already have your heart set on a neighborhood.It's worth looking at neighboring areas to find the best deals.The proximity to schools, ease of access, and upkeep of the houses and commercial areas around the neighborhood are some things to consider when evaluating a neighborhood.Neighborhoods that look run-down and neglected may be a good investment opportunity, but they may come with risks, including increased crime rates.Use real estate websites to find out what homes in different areas are selling for, as well as what comparable homes sold for in the past.This can show you if homes in the area are increasing or decreasing in value.
Step 6: You can make a list of features.
There are two categories: features you must have and features that would be nice to have.You could include a third category of "dream" features that you don't really expect to find.Unless you're building your dream home from the ground up, you won't be able to find a home on the market that has everything you want and is within your budget.Consider how features interact with each other.If the property has a large back deck, you may be willing to give up a front porch.You could swap a garage for a carport.If you found a house without some features, you could add them to your own.
Step 7: A real estate agent can help.
A real estate agent with experience buying and selling homes in the neighborhoods you like will be best suited to help you find the home you want.An initial consultation with a real estate agent can help you narrow down your options.A real estate agent can tell you if the features you want are realistic for your budget or neighborhood.The agent might be able to point you to other neighborhoods where you'd be more likely to find a house you want.Real estate agents have access to listings before the public.In a hot market, these properties may be under contract before the listing even appears on a real estate website.
Step 8: Go to homes in person.
While you can search, put in an offer, and even buy a house in many markets sight unseen, if you're buying a home near where you currently live, there's no excuse not to go look at the home in person.Photos don't tell the whole story about a house.Every door and cabinet should be opened when in the home.Walk through every room in the house to see if there are any features that will come with the home.Ask the seller's real estate agent as many questions as you can about the property.Their job is to sell you the property.If they can provide proof to back up their statements, you can expect them to be honest, but you should still take their answers with a grain of salt.
Step 9: Tell your skills and knowledge.
It's tempting to buy a cheap house in a neighborhood you like, but the problems with it are more extensive than you think.Make sure the required repairs aren't beyond you before you put your life's savings into a home.If you will need to hire an expert, such as a general contractor or roofer, to fix the house before it is usable, talk to several and get estimates before you make an offer.It's a good idea to talk to an expert and make sure you know what you're getting into before you start.Take time to consider.It might take you a week to complete a project.If you don't have the time to invest in a house, you can either hire a professional or look for another place to live.
Step 10: Before you make the offer, verify your funds.
A suitcase full of cash may cause a deal to fall through.If you want to buy a house with cash, you need to have money in a bank account and be able to explain how you got it.A bank statement showing the total balance is all you need.You may be asked to document how you got that money.If you show regular deposits over several years, it's obvious, but a single large deposit may require further explanation.You may hear this referred to as "seasoning" your money in the mortgage industry.It means that the lender wants to know where the money came from and that it's been in the bank for at least 60 days.
Step 11: The seller should get a purchase agreement.
Once you've decided to buy a house, you will usually draw up a purchase agreement that outlines the terms of your offer.There are online forms that you can use to format this document.Make sure the form is valid in your state.Some states require specific information to be included in real estate transactions.You can provide the name of the state where the agreement will be used if you get your form from an established legal forms provider.Real estate agents have their own purchase agreements that they use.You attach a document to the purchase agreement to verify your funds with a cash-only offer.
Step 12: If necessary, try to negotiate with the seller.
If your initial offer was a low-ball, even though most sellers favor an all-cash offer, they may still want a higher price.If the seller wants more than you're willing to pay, walk away.It is possible for sellers to be attached to a home for sentimental reasons.
Step 13: The seller should accept your offer.
The sales agreement will have to be merged with your purchase agreement if the seller accepts your offer.Signing the two agreements is all this involves.Once the seller accepts your offer, you're expected to put down a percentage of the purchase price as an earnest money deposit.The house is considered to be under contract.Failure to obtain financing is one reason you won't have to worry about since you're buying with cash.
Step 14: The house has been inspected.
Before agreeing to finance the purchase of a house, a lender would require an inspection.If you're buying a house for cash, you don't have to have an inspection done.It is usually worth it for the peace of mind.Don't hire your own inspector if the seller has recently had an inspection.If you're happy with the seller's inspection, you won't need to do it yourself.Make sure it's been done in the past year.Depending on where the house is located and how large the property is, you can expect to pay between $200 and $800 for the inspection.
Step 15: If it's necessary, negotiate the price.
Repairs may need to be made to the house before you move in.The seller may agree to make the repairs before you move in, or they may lower the price to account for the additional expense.The buyer of a house that is sold as "fixer-uppers" is responsible for any repairs that are made.You know what you're getting into when you get an inspection.
Step 16: Contact the company that holds your title.
If you have a mortgage lender, they will usually conduct a title search to make sure the sellers are the rightful owners of the property.This is your responsibility if you are buying a house for cash.It is possible to do a title search on the home on your own.It can take a lot of time.Unless you know what you're doing, don't attempt a title search on your own.Title insurance is one of the benefits of using a title company.Your ownership right will be protected if there is a flaw in the title history.It costs around $1,000 to have title insurance.This is not a recurring fee.You don't have to pay continuing premiums for other types of insurance.The title search costs between $100 and $250.
Step 17: A cashier's check is a good way to initiate a bank transfer.
Buying a house with cash is not the same as showing up at closing with a briefcase full of money.This may be the easiest way to transfer money from your bank to the seller's account.You'll have to pay a fee for the bank to issue the check if you get a cashier's check.The seller may have problems with their bank.Since it is such a large transaction, the bank may hold the funds for 24 to 48 hours.
Step 18: You should attend the closing of the house.
Signing the paperwork to transfer ownership of the property from the seller to you requires check or transfer information.The house is yours when you give them money.If you've never done a closing before, you should hire an attorney.Even if you're buying the house for cash, there are a number of documents that need to be signed.You can expect to pay between $400 and $1,000 for an attorney.Some title insurance companies will complete the closing for you at a lower rate than an attorney would.