Buying a home with cash is much simpler than purchasing a mortgage or loan. It is usually a fairly quick and hassle-free process.
However, not many people use this payment method to buy a house. So, if you are one of those attracted to buying a house with cash, you must be wondering how to go about the whole process.
Buying a house in cash is not exactly in cash
A very common mistake when considering buying a house with cash is the idea of believing that you are dealing with real cash. While it may sound the most logical thing to refer to as “cash,” in reality, this is not the case.
When talking about a purchase as large as a house, “cash” as a payment method refers to having all the money available to purchase the house almost immediately.
The money is generally not delivered in cash because it would be too much to count and, above all, too risky. The money is usually delivered by check or bank transfer.
How to bid cash for a house?
Making a cash purchase of a house is a relatively simple process compared to when using other methods of purchase. It is advisable to follow some steps and tips to ensure the business’s success.
Choosing the right house
In the market, you can find many houses at good prices and others not so good. Finding the first ones can be a bit more complicated because of the latent risk behind an extremely low price.
That is why, before making any offers for any house, it is necessary to think carefully and evaluate which one is convenient. Thus, you avoid a great waste of time bidding for any house as a buyer.
Make an offer
Once you have chosen a house that you consider the most convenient for your needs and budget, you should make an offer to the seller.
Before making an offer, especially a cash offer, it is advisable to work with a real estate agent or lawyer. They are the ones who have experience in these cases and may have several considerations before making an offer.
Reach an agreement
After making your offer, there may be a situation where the seller has a counteroffer. Under these circumstances, you should reach a sufficiently convenient agreement for both the seller and the buyer.
Under no circumstances should you assume that your offer will be the final price; reaching a price agreement with the buyer is always necessary. It will also be very favorable for you to foresee several situations with your real estate consultant.
Provide a letter of available funds
The letter of funds is a document where the bank states the amount of money available in your account; sometimes, they can add your average balance and other details.
In this particular case, you only want them to see your current balance to be able to corroborate the existence of the funds to purchase the house. If you do not have the funds, the seller is probably not interested in proceeding with your particular offer.
Therefore, by providing this document endorsed by the bank, either to the buyer’s attorney or advisor or directly to the buyer, you demonstrate that you have the funds to purchase the house, and your offer becomes one of the most attractive.
Hire an expert to evaluate the house
Usually, when banks are involved in the acquisition of a house, they hire an expert in appraisal and valuation, and he gives his estimate regarding the conditions and price of the house.
According to his evaluation, he may give a lower price than the published price or even higher. The expert reviews the conditions of several aspects of the house, the lifetime of several of its materials, the quality, its location, etc.
It is based on all of the above to define how much the house may be worth and help you bid more realistically, for or against the seller or buyer.
When you make an independent offer to a bank or any other entity or company because you have the cash, you must be the one who hires and pays the appraisal expert.
Although it is not a requirement to be able to bid on a house in cash, it is considered an essential recommendation to avoid future inconveniences and disappointments with the purchase of the house.
Make an earnest money deposit
If you are satisfied with the inspection and are sure about buying the house, it is time to start with all the corresponding procedures. The first one is the earnest money deposit.
With the guarantee deposit made to a lawyer or a company in charge of these operations, you can give the buyer certainty that you will close the transaction and the sale will be completed.
Closing the transaction
Once you have listed all the necessary documents and completed all the other procedures required to proceed with the purchase and sale of a house, it is time to meet and close the transaction.
To conclude the transaction, you must deposit the rest of the house’s total value funds in the escrow account through a bank transfer or the deposit method used by the company or the lawyer.
Once you have made the deposit, the only thing left to do is to close the purchase contract with the delivery of these funds to the seller and the delivery from the seller to the buyer of the title deed and other required documents.