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How Fast Can You Close on a House with Cash

James Anderson

August 29, 2022

Under suitable conditions, buying a house with cash may be a fast and easy process. Once the seller has accepted your proof of money, there are just two more essential procedures before the sale can be closed.

Timeframes may change according to several variables. Closing on a cash transaction typically takes between four and ten business days. But remember that even if a buyer pays cash, the deal will still need to go through title insurance and underwriting.

Depending on the property's complexity and the concerns uncovered by the title insurance underwriters, the title procedure may take several months. In addition, this schedule assumes the buyer can close swiftly, and there are no liens on the property other than the mortgage.

After the inspections are over, you should see an attorney to draft the necessary paperwork to conclude the deal. At this point, you will also work with an escrow firm to manage the money transfer. There will be a one-week delay while this is being done.

What is The Traditional Real Estate Closing Timeline?

  • Closing time for an all-cash purchase

Cash acquisitions often have a quicker closing time than those using a loan. A cash transaction may close in as little as two weeks after you've signed a contract, which is plenty of time for the title and escrow agencies to take care of any liens, issue insurance, and prepare the necessary paperwork (more on that later).

  • Closing time for a financed purchase

Assuming the buyer needs a mortgage to fund the purchase, the closing process might take up to 30 days. Both parties typically agree on a closing date, which is usually 45 or 60 days out, to accommodate the buyer's or seller's relocation plans or the timing of the transaction with the acquisition of another property.

If you're paying cash, the transaction may be finalized in as little as two weeks. However, securing a mortgage will take at least 30 days from application to closing.

Steps to Buying a House With Cash:

Signing Agreements Is A One Step To A Cash Sale

Agreements

Ultimately, a transaction may only go through if the conditions are mutually agreeable to the buyer and the seller. The purchase price, the closing date, the amount of earnest money to be paid, the method of paying closing fees, the existence of any selling conditions, etc., may all be up for discussion and negotiation.

Checking the Source of Funds

The term "proof of funds" refers to the documentation a seller requires from a cash buyer to prove that the buyer has the money on hand to close the deal. A bank or brokerage statement showing an available balance of at least the amount of your offer would qualify as proof of money. You may, for instance, open a particular account to house the cash and deposit the whole amount of your offer there.

Committing to the Agreement by Signing a Contract

In most cases, a cash purchase may be finalized far more quickly than a mortgage purchase. Possession of the residence is often taken within a few weeks, even though specific paperwork must still be completed.

Opening of Title

During a transaction, a title firm plays the role of an impartial "middleman." Among a title company's responsibilities is verifying that the sold property matches the terms of the sales contract (free of encumbrances or other issues that may affect the property).

 Additionally, they ensure that any liens on the property are located and resolved before closing by checking the seller's legal standing. The pace of the transaction is entirely at the discretion of the title firm.

Earnest Money Paid to the Title Company

The buyer's commitment to fulfilling their end of the agreement is symbolized by the "earnest money" they deposit. Purchasers paying in cash must back their promises with actual funds. Earnest money in Texas often amounts to one percent of the purchase price.

Earnest money is usually lost to the seller as "damages" if the buyer fails to fulfill their contractual obligations. A buyer who is hesitant to put down the standard 1% in non-refundable earnest money probably has doubts about their ability to complete the purchase. This might cause the deal to fall through in the future.

Inspections

Set up an examination of your future house to be sure it has no surprises in store for you. An inspection clause with the words "for informative purposes only" is common among cash purchasers. If you add an inspection contingency for due diligence, you're informing the seller that you won't require them to make any repairs based on the inspection results.

However, you retain the right to back out of the deal if the inspection results are catastrophic. However, if the price is right, you're eager to buy the house regardless of its condition.

Appraisals

An expert appraiser establishes the fair price of a house. A certified professional appraiser conducts appraisals. Owner-occupants may find these improvements desirable, while AMI and other investors often do not.

Closing

When the closing occurs, you sign all the paperwork necessary to transfer ownership of the house to the buyer officially. When everything for closing is in order, the title firm checks to ensure they have everything they need; if everything checks out, the buyer wires or mails a cheque to the seller, who then uses it to settle any outstanding mortgages or other encumbrances on the property.

Factors That May Cause Delays

Bankruptcy Can Cause Problems With Cash Sales

Poor Evaluation

If the appraisal rate is lower, the buyer is entitled to have the sales price reduced to the appraised value. If a house "under-appraises," the seller has no legal obligation to lower the sales price to save the deal.

Liens

For the transaction to go through, the title firm has to receive payment for any liens against the property. The rewards are not always easy to get your hands on right away due to complications like how the payout is requested.

(Mortgage servicers will only accept payoffs sent by regular mail or fax, the latter of which is always preferable due to its speed.) Some lien holders (such as homeowners' associations or liens handled by legal firms) may additionally tack on extra costs for expedited payoffs.

Providing False Information to a Customer

If you are delinquent on property taxes, have other liens, or need to include someone else in the transaction, be sure to tell the buyer. Since the title company will eventually discover these problems, it's preferable to be forthright about them so they may be resolved and the transaction can proceed as quickly as possible.

Option Periods

A speedy sale is guaranteed by either no option period or a short one since this forces the buyer to make up their mind swiftly on whether or not to back out. The longer the option period, the more time the buyer has to back out of the deal without incurring any costs or legal liability. The buyer's earnest money will serve as compensation if they do not close on purchasing the house following the option period.

Possession of the Title by the Deceased

Extra proof of ownership must be provided when a decedent's name appears on a title or deed. Additional paperwork may be required if the estate has gone through probate. The time it takes to sell a property may be affected by factors such as how quickly all heirs can be located and confirmed and how quickly they can agree on selling terms. Multiple factors come into play, including whether the dead person had a traditional or reverse mortgage. These challenges are manageable, but they need more effort.

Current Bankruptcy

For the transaction to go through, the seller may require approval from the bankruptcy court if they are going through the procedure.

Some Benefits of Buying a House With Cash

Purchasing a house with cash is far more expedient. Since a bank or other financial institution is not required, it is also easier to complete. Some additional benefits of buying a house with cash are listed below.

BenefitExplanation
Sellers like doing business with you.  There is minimal risk of the sale falling through owing to the buyer's inability to get financing, which is why cash purchasers are so attractive to sellers. Therefore, they favor purchasers with cash over others. In a seller's market, this might be the deciding factor.  
Reduce Your Closing Expenses  Numerous closing charges are associated with every mortgage-financed home transaction. Examples of these include origination fees, discount points, and appraisal costs. If you're purchasing a house with cash, you won't have to worry about any of those costs.  
Borrow Against Your Home's Value  The amount of money you may borrow via a home equity loan or home equity line of credit (HELOC) is determined by how much equity you have built in your property. As a result, the mortgage amount you may qualify for will be relatively low if you have just purchased a home.   If you purchase a home outright with cash, your equity stake in it will be quite strong, making you eligible for a bigger loan. The property's equity with cash may be used to get a loan for up to 80% of the purchase price.  

What is Required to Close a Cash Real Estate Deal?

The following materials are required for your signing appointment:

  • A valid government-issued photo ID.
  • The deed, if the mortgage has been paid in full.
  • Access codes for the home's security system, including the keypad, the garage door opener, and the safe.
  • A certified or cashier's check for the amount of any expenses, such as lien payments, property taxes, or prorated utility bills that, will not be met by the profits. If you need to bring more money, the escrow business should tell you ahead of time.

Personal Insights

Here is what 5 thought leaders had to say:

  • Be Wary of Unlicensed Buyers
  • Find a Realtor that Specializes in Cash Sales
  • Ask for Proof of Funds

Be Wary of Unlicensed Buyers

One of the biggest dangers is working with an unlicensed buyer. These buyers often don't have the necessary experience or resources to close on a deal, which can leave you high and dry. Additionally, unlicensed buyers may not be up to date on the latest real estate laws, which could put you at a disadvantage. 

While it's always important to be cautious when working with any buyer, it's especially important to be aware of the risks associated with working with an unlicensed buyer. By taking the time to do your research, you can help protect yourself from undue financial hardship.

Antreas Koutis, Administrative Manager, Financer

Find a Realtor that Specializes in Cash Sales

If you are contemplating a house cash sale, the first thing you should do is find a real estate agent that specializes in house cash sales. A house cash sale is different from a typical real estate sale and requires a distinct set of skills. 

Your real estate agent should be able to walk you through the process from start to finish and answer questions you may have. 

It is also important to understand that a house cash sale is not a quick process. It takes time to find the right buyer, so be patient and stay focused! If you are thinking about selling your house for cash, contact a real estate agent today!

Luciano Colos, Founder & CEO, PitchGrade

Ask for Proof of Funds

Acquiring proof of funds should be the first step for anyone considering a cash sale. This means obtaining a letter or document from the bank or other financial institution that details how much money is available to the potential buyer. 

Proof of funds is important because it signals that someone is a serious buyer and that they have the means to complete the purchase. In addition, proof of funds can help to speed up the closing process, as it eliminates the need for financing. 

If you're thinking about making a cash sale on a property, be sure to ask for proof of funds from the buyer’s bank or other financial institution. This will show that the person is a serious buyer and helps to ensure a smoother transaction.

Ludovic Chung-Sao, Lead Engineer & Founder, Zen Soundproof

How Fast Can You Close on a House with Cash: Final Thoughts

Get in touch with us if you need to sell your property quickly for cash. We have a good connection with our go-to title business, never employ hard money financing, and never require an option period or an assessment.

 The combination of these elements enables us to maximize throughput. Sellers who face foreclosure or other financial hardships and need to sell their properties quickly may benefit from our rapid closing services.

A variety of considerations should be made before settling on an escrow service. There are several factors to weigh, such as cost, convenience, quality of service, and even personal and professional recommendations.

FAQ:

When paying cash, how long does the closing process typically take?

Assuming you can convince everyone of the legitimacy of the money's origin, the process shouldn't take long. Of course, you should have the house inspected beforehand to ensure there aren't any hidden problems that will cost you a fortune to rectify and delay the process.

Most states have a two-week grace period for empty properties, but this is not set in stone, and you should check the specific rules in your area. If the seller doesn't already have a new home to live in, they may prefer to stay there for the rest of the month until a new location can be found. They can't remain forever, and the seller agrees on the closing date.

The title business will perform a title search to ensure no other parties have any legal claims to the land, and new legal paperwork will need to be drafted. A lawyer is recommended but not required. You'll have to hold off until the attorney has time if legal representation is required. It may be quick. A holdup is possible.

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