Buying a House with Cash

[Beltzington]

Anyone have lessons learned? In the past my mortgage bank has always taken care of the paperwork and insured the required inspections are completed. Online research seems to indicate a closing attorney would fulfill this role but I wonder how to determine if they know what they are doing. Do they maintain any skin in the game should title or other property line disputes arise after the closing? The property is being sold "as-is but I am very familiar with both the house and the neighborhood so I am not overly concerned about the condition of the house only insuring any future legal disputes by neighbors or disgruntled heirs of the seller are address during the closing.

 

[davesl708]

Part of the attorney's work should be a title search and title insurance. A survey would be good insurance as well to deter boundary claims.

 

[Gary Fowler]

A title search AND boundary survey is the least amount of investigation that needs to be done. A house inspection by reputable company for code violations and termite damage is the other thing that should be done and isn't that expensive.
A title search is the highest priority of things to do. You don't want to buy a place and then discover that it has a lien on it for much of the value that you would have to pay off it you wanted to keep the property. You would then have to see if you could get your money back from the seller, a losing proposition in most cases.

 

[Gary Fowler]

After the sale, don't forget to go to the county tax assessor and get the title in your name, if applicable apply for homestead exemption etc. so you will receive the yearly tax papers. You don't want to become delinquent on your property taxes.

 

[Ed of all trades]

I am in the process of buying a house without a realtor and have to do about the same. I asked a lawyer I had used in the past and he sent me to the guy he got to do his. Get someone to guide you when getting a lawyer, They can be great and not so great. Ed

 

[Furu]

Anyone have lessons learned? In the past my mortgage bank has always taken care of the paperwork and insured the required inspections are completed. Online research seems to indicate a closing attorney would fulfill this role but I wonder how to determine if they know what they are doing. Do they maintain any skin in the game should title or other property line disputes arise after the closing? The property is being sold "as-is but I am very familiar with both the house and the neighborhood so I am not overly concerned about the condition of the house only insuring any future legal disputes by neighbors or disgruntled heirs of the seller are address during the closing.

I have bought and sold houses in several states from back east to out west. Not all states may be the same however.

I paid cash for a real estate transaction for the first time just last year. No bank was involved. From your post I presume no Realtor is involved either.
While having a lawyer is not a bad idea you can save a lot of money by insuring you take care of the little things so the lawyer does not "pad/inflate" his/her "billables."

You can hire an inspection company to do the inspection. Have them work for you and report to you.
Your bill of sale can be modeled off the MLS bill of sale. In it it should state that the seller pays for property title insurance (the standard in most states). Of course you can do it but that is not the standard. The loan title insurance that the buyer normally pays for is not required as there is no loan, you are paying cash.
A survey is a really good idea.
If it is an estate/probate sale make certain the estate is final and the "seller has the authority to sign. The title company should verify that as it is their title insurance that would have to deal with it but verify anyway.

Get a draft HUD 1A from the title company it should detail all costs except for your lawyer. The final HUD 1A is after closing.

Part of the attorney's work should be a title search and title insurance. A survey would be good insurance as well to deter boundary claims.

This is actually the Title Company's job. Any lawyer would just hire a Title Company to do it and charge you his take.

After the sale, don't forget to go to the county tax assessor and get the title in your name, if applicable apply for homestead exemption etc. so you will receive the yearly tax papers. You don't want to become delinquent on your property taxes.

The Title Company automatically does that when you close.

 

[Zerk]

I bought a place that was listed on MLS, and they had realtor. They paid for title insurance, which is probably all you need to do.

I have never surveyed a property. unless there is something on the edge of the property, I wouldn't worry. Evenin town most people don't bother, unless they are going to build a shed.

I wouldn't pay before the sale, incase sale doesn't go through. Unless it makes a difference to say. Never has to me.

 

[blueriver]

I paid cash for my place ... the title company i used had their own attorney and everything was handled by one firm.

 

[kenmac]

Not sure how inspection companies are in your area, but the ones I've been behind in my state ,I would have say, you are throwing your $$ away..
The home inspection companies here, take an on line course pass a online state exam that means hardly a thing.. They have no clue as to any state / national codes as it relates to foundations, HVAC, Plumbing / Gas codes, Electrical codes ,etc,..I have had to re plumb , reinstall gas appliances to meet code after home inspectors passed it all... Have friends that are master electricians ,that have had to repair wiring, breaker boxes, etc, that these inspectors pass as good to go.

My advise to buyers, is , if you want an inspection....Hire a termite company to inspect for termite damage, hire a plumber to inspect for plumbing, hire a HVAC contractor for HVAC, electrician for electrical,, etc, etc, They know the codes, and can advise about potential hazardous condition.... Will it cost you more ? Sure But, to think a home inspector is certified to inspect everything about a home for 1 low price ,and all will check out ok, is wishful thinking..
This 1 home inspector is most likely not certified in anything except his home inspection certification

This is 1 person's opinion that's been in and around the trade for over 30 yrs.. Not much I haven't seen

 

[ultrarunner]

Cash is the easy part... simply the opposite of getting a loan or having a loan contingency... up to 40% of the homes are sold cash.

For Sale By Owner is a little different... if a Title Company is used through Escrow most would not know the difference...

It is incumbant on the buyer to order of perform any inspections deemed necessary.

The first home I bought was a simple cash transaction with no lawyer or title company... typed up the deed found a notary and went to the recorders office.

Did review a preliminary Title report and everything was clean... paid 15k for the 800 square foot 1927 cottage in 1983.

Since then I have paid for Title and Escrow even when no Broker or Lender is involved.

I'm in California so your mileage may vary.

 

[MinnesotaEric]

Anyone have lessons learned? In the past my mortgage bank has always taken care of the paperwork and insured the required inspections are completed. Online research seems to indicate a closing attorney would fulfill this role but I wonder how to determine if they know what they are doing. Do they maintain any skin in the game should title or other property line disputes arise after the closing? The property is being sold "as-is but I am very familiar with both the house and the neighborhood so I am not overly concerned about the condition of the house only insuring any future legal disputes by neighbors or disgruntled heirs of the seller are address during the closing.

Buying for cash?

Okay. I have a MN real estate broker's license.

You make an offer, and the seller accepts.

You write your offer with a contingency of an inspection and an engineering inspection even though the seller is selling "as-is" (I assume the seller is a bank and knows nothing about the RE but "as is" RE still must pass muster). These are your two opt-outs if you find anything that makes you want to walk away, or you need to write an addendum to your offer to have the seller sort something out, or accept less consideration for the condition found in the inspections.

Hire an inspector. If you have radon issues in your area, get the home tested. Remediation will cost the seller about $1200-2000 to have a pro do it.

You will pick the closing office.

You will want to purchase title insurance. Your closer will do this for you.

You will have the seller pay for any back taxes. Current year taxes are pro-rate to the time of sale.

With cash, you will save on not paying the mortgage tax.

You will pay a deed tax to the county and recording fees.

You will pay the closer their fee.

The seller will pay the Broker's commission. If you have an attorney, the attorney will be paid through the seller's broker if there is a facilitator commission, otherwise, the seller's broker will giggle and keep the entirety of the selling commission. BTW, if I list a property, I do not pay facilitators because I do not want an attorney messing around, I want another broker as my counter-party so if we have a problem, I can pick up the phone and work it out broker to broker, as well as the backstop of the local real estate association, and state commerce department.

That said, you can either hire an attorney or a RE broker or one of their sales persons as your representative. If you hire an attorney confirm that the seller agrees to pay a facilitator, or you will be paying your attorney out-of-pocket.

If your state allows dual agency like MN, open up the phone book and pick anybody but the person representing the seller to avoid a conflict of interest (if the RE agent is representing both sides of the sale, you automatically are getting reduced services and you should negotiate a much lower commission if you're on the sell side).

Anyway, have fun.

If the seller is a bank, the proper first response to an offer is no. If yes, you offered too much. If the seller says no, they should counter your offer and now your wheeling and dealing which is a lot of fun!

If the seller is by owner (FSBO, for sale by owner), be careful with low-ball offers because people take it personal when low-balled, and may never want to hear from you again.

 

[Ford850]

Be sure to find out if it's in a Special Flood Hazard Area as defined by FEMA. Don't go by what's on an appraisal, or what some inspector tells you. Do some research on FEMA's website, or at the communities zoning office, and find out for sure. If it's in a SFHA, no lender can offer a mortgage on it without insurance (federal law). Those insurance premiums could be minimal, or they could be more than the mortgage payments. Flood insurance isn't required for your cash sale, but you won't be able to sell that house to someone else that needs a loan unless they get insurance.

 

[bullbreaker]

Remember your not just buying a house but land on it also . Check into gas ,water, mineral rites , easements ,road pass rites etc .If they come into play. Of course evry region / state/ etc varies . Oh and espeicially round here "Chinese drywall" !

 

[Howling]

If the seller is a bank, the proper first response to an offer is no. If yes, you offered too much. If the seller says no, they should counter your offer and now your wheeling and dealing which is a lot of fun!

We bought a bank owned/foreclosure. Made a full price offer on Friday. Tuesday the bank effectively counter offered by dropping the price $15K. We said OK to lower price.

As Eric mentioned the taxes need to be paid up thru the closing date. Also check the utilities to make sure there are no back bills to be paid before you can get services turned on/over.

Home inspectors are hit or miss. Our RE agent is retired contractor. Learned more about the house from him then the home inspector.

Check if there is any special requirement for your area. Mass. has requirement for Fire dept inspection of working smoke & CO detectors before we could do closing. With as-is and no power on I had to go in take down hardwired detectors and mount battery powered units so FD could inspect.

 

[TnAndy]

We bought a bank owned/foreclosure. Made a full price offer on Friday. Tuesday the bank effectively counter offered by dropping the price $15K. We said OK to lower price.

I'd still be at the ER having my jaw pried off the floor.........

 

[Dennisfly]

When you buy with a mortgage, the lender requires the title insurance to protect their collateral. In that case, if you want owners title insurance, you pay extra in addition to buying the lenders insurance for them.

In your case, just buy it for yourself. The insurance company won't issue the the policy until they have done a title search.

I would use the Realtor Association contract and hire a real estate lawyer to review it before signing and to act in your interest (not a closing attorney paid for by the seller) to assure that you have complied with all of the state requirements and are protected.

 

[LD1]

Lots of good advice. Ditto what others said about title search, and survey. Also the mineral rights.

As to home inspections.....

Not sure how inspection companies are in your area, but the ones I've been behind in my state ,I would have say, you are throwing your $$ away..
The home inspection companies here, take an on line course pass a online state exam that means hardly a thing.. They have no clue as to any state / national codes as it relates to foundations, HVAC, Plumbing / Gas codes, Electrical codes ,etc,..I have had to re plumb , reinstall gas appliances to meet code after home inspectors passed it all... Have friends that are master electricians ,that have had to repair wiring, breaker boxes, etc, that these inspectors pass as good to go.

My advise to buyers, is , if you want an inspection....Hire a termite company to inspect for termite damage, hire a plumber to inspect for plumbing, hire a HVAC contractor for HVAC, electrician for electrical,, etc, etc, They know the codes, and can advise about potential hazardous condition.... Will it cost you more ? Sure But, to think a home inspector is certified to inspect everything about a home for 1 low price ,and all will check out ok, is wishful thinking..
This 1 home inspector is most likely not certified in anything except his home inspection certification

This is 1 person's opinion that's been in and around the trade for over 30 yrs.. Not much I haven't seen

I agree 100%. They really dont know what they are doing. Spend an hour...if that...and get a nice $300 payday. And have ZERO accountability. My first house had an inspection. After moving in, there were several outlets that didnt work, GFI's wired wrong, No pressure tank on the plumbing, Outside spigots that leaked out the anti-siphon valve when on, etc etc. My brothers house, the inspector missed the charred main wires coming into the service panel. Wires that had insulation burned/melted back 4" from the main breaker and exposed wire. Heat pump didnt work, but didnt find out til after the first few electric bills that he had been running on the strips only, and ofcourse no AC in the summer.

Then when I sold my house, the inspector for the buyer claimed that some of the GFI's didnt trip like they were supposed to (tested with his $5 meter). And these GFI's are ones I replaced just 2-3 years prior when remodeling a bath. And a 60a breaker for the range I guess was a red flag to him....but somehow passed my inspection when I bought the house. Oh, and one of the toilet seats was loose:laughing:

 

[Howling]

I'd still be at the ER having my jaw pried off the floor.........

Our agent called said the bank had scheduled a price drop and asked if we minded they adjust our offer down the $15K to match. Didn't have to think long on that one.

Title insurance can have conditions. The search found an issue so we had a 3 year window someone could contest/sue. Past that now with no issue.

 

[kenmac]

Lots of good advice. Ditto what others said about title search, and survey. Also the mineral rights.

As to home inspections.....



I agree 100%. They really dont know what they are doing. Spend an hour...if that...and get a nice $300 payday. And have ZERO accountability. My first house had an inspection. After moving in, there were several outlets that didnt work, GFI's wired wrong, No pressure tank on the plumbing, Outside spigots that leaked out the anti-siphon valve when on, etc etc. My brothers house, the inspector missed the charred main wires coming into the service panel. Wires that had insulation burned/melted back 4" from the main breaker and exposed wire. Heat pump didnt work, but didnt find out til after the first few electric bills that he had been running on the strips only, and ofcourse no AC in the summer.

Then when I sold my house, the inspector for the buyer claimed that some of the GFI's didnt trip like they were supposed to (tested with his $5 meter). And these GFI's are ones I replaced just 2-3 years prior when remodeling a bath. And a 60a breaker for the range I guess was a red flag to him....but somehow passed my inspection when I bought the house. Oh, and one of the toilet seats was loose:laughing:

that's right,, they have ZERO accountability ....The fine print on the contract gives them an out..

 

[cat fever]

Instead of paying up front, take out a 25 or 30 grand loan. Let the bank do all the legal work. After it's all said and done, pay it off.