The phrase “all-cash offer” is actually a misnomer. Did you know it’s illegal in the U.S. to close a real estate deal with actual cash?
Instead, an all-cash deal is when someone buys a house outright, without financing. To close, they transfer the funds electronically or with a cashier’s check.
All-cash offers typically come from two types of buyers: individual buyers (who plan to live in the home themselves) purchasing without the help of a bank, and real estate investors, who can also be called iBuyers
The first step in closing is accepting your buyer’s offer and completing a Purchase and Sale Agreement contract — commonly known as “going under contract.”
Since your buyer is using their own cash to close the deal, you’ll want to make sure they actually have the money available. Typically, you’ll ask for earnest money up front (usually 1-2 percent of the sales price) and request proof of funds in the form of bank or investment statements. Your real estate agent can help facilitate this process.
Depending on the state, you might choose the companies, or the buyer might. A title company is responsible for making sure the property lines are drawn correctly and that there are no property liens that need to be addressed; issuing title insurance; and, on closing day, ensuring that the actual property ownership changes hands. The escrow company is responsible for managing all closing documents, facilitating the transfer of funds, and completing the legal paperwork that records the sale. Note that sometimes the same company can handle both the title and escrow tasks.
A property lien is a legal notice related to an unpaid debt. If you’ve failed to pay your taxes, child support, the settlement for a court case against you, or a contractor who has done work for you, a lien can be placed on your home until you settle the debt. Long story short: You can’t sell your home until all liens are cleared, and it’s the title company’s job to make sure there are no outstanding liens before closing.
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. Once this last negotiation is complete, you’re ready for closing.
Get your signing hand ready — it’s closing time, and a mountain of paperwork is pretty much a guarantee, even when dealing in cash. Here’s what you can expect to review and sign: Final closing instructions: Closing instructions are sometimes signed when your escrow account is first opened, but if you haven’t signed them yet, you’ll do it now. It’s basically a detailed outline of the tasks your escrow company is responsible for, and the process they’ll follow to complete your closing. Make sure to double-check all amounts.
Required by federal law, the HUD-1 is a detailed accounting of all money involved in the deal. It includes everything you will have negotiated up to this point, and more: sales price, payoff balances, pro-rated tax and utility bills, and more. You’ll want to keep this form for your taxes. Make sure to have your closing agent go through line by line before you sign so you can check for errors.