How do I close on a cash purchase?

Question

I will be purchasing a home for cash. Not the normal way that I like
to do things but the price is very low and the homeowner is giving
a tremendous discount on the purchase price (I will be purchasing at about 58% of appraised value... home needs no repairs). Because I will not need a loan and seeing as the homeowner own the home outright (I will be doing a title search and inspection), how do I go about getting the closing setup. What costs are involved/saved by paying in cash v.s. a mortgage?

Thanks in advance for any replies. This is a scenario that I have not run into before.

Paul Tomlinson · Answer

I spoke to an attorney who informed me that either a warranty deed or quit claim deed (and then filed) will work fine in the state of Ohio.

Paul Tomlinson · Answer

After I have the home inspected and the title search run, what is the process for closing when paying cash on a home that is owned outright by the homeowner? This particular homeowner literally wants me to hand him money this weekend in exchange for the deed.

Frank Adams · Answer

Whoa, whoa, whoa there pauly;

The "deed" isn't something that you "possess". At least in any state that I'm aware of/have done business in. Maybe there are some states where the deed is like the "pink slip" for a car, but in the states that I do business in, the "deed" signifies the "transfer" from one party to another, it's the RECORDING of the deed that's paramount.

Unless you're an attorney (and it doesn't sound like you are) call a TITLE COMPANY/ESCROW COMPANY (or a RE Agent and ask who does ppty transfers in your community) and get with them.

Let me give you an example of how it's done in TX and other "Trust Deed" states. A TITLE INSURANCE company checks the RECORDED FILES to see any and all ENCUMBRANCES on the ppty, an ATTORNEY writes up a WARRANTY DEED (which XFERS ownership from the SELLER to the BUYER), the NOTE (which signifies the INDEBTEDNESS) which won't be needed in your case, the DEED OF TRUST (won't be needed here as there is no DEBT, hence no TRUSTEE).

Giving you a DEED doesn't mean a thing. I could give you a deed and take your cash and you would just be out of your money with nothing to show for it, except a WORTHLESS "DEED".

Before you get too involved in doing any kind of deals, particulary the kind of "creative" financing deals that are typically discussed on this and other forums, I suggest you LEARN the proper way that ppty is XFER'd in your jurisdiction. This is an excellent opportunity to do so. BUT DO NOT TRY TO DO THIS YOURSELF.

Self-help dentistry may be CHEAP, but it's often PAINFUL. Same thing with self-help LAWYERING. Get a pro in here, probably cost you all of about $300.

all cash

Lee Warren · Answer

Just a footnote here.  An exterior inspection will tell you very little about the condition of the property.  I know when I do an inspection, it takes about 3-4 hours to complete.  About 2/3 of that time is spent on the inside if not more.  Different states have different laws for inspectors.  In Texas, all inspectors must be licensed by the Texas Real Estate Commission.  You might want to check with you local laws so you don't run into someone that "claims" to be an inspector.  I know it sounds like I am only putting in a big plug for myself, but that's not the whole intention.  In the numerous inspections that I have done, I have seen many things that sellers have tried to hide that a simple walk-through would have never seen.  It can be quite cosstly in the long run if you find out about a problem later.

Best of luck to you.

Lee Warren

Paul Tomlinson · Answer

All Cash, thanks. I'm dealing with a grumpy old man. He wants things
to close yesterday because medical bills are mounting due to a heart
attack in December. I found out through titlesearch.com that I can
have a title search done on the property (to cover myself) as well
as an exterior inspection (I would rather have an interior inspection perfomed as well). The property is about 8.5 hours from where I live
so I may not be attending the closing at a table with the owner. Any recommendations in so far as that is concerned?

I welcome the move to the Dark Side... albeit it is a little scary for a guy thats never done that before.

Frank Adams · Answer

pauly; when you see how sweet the number are on cash flow when YOU own it outright, you'll change your mind and make this "the way you like to do things" (see my name on this site!).

Legals should be a tiny bit less, as there will only be a Warranty Deed and HUD-1, no Deed of Trust, no Note needed. Closing should take about 30 seconds.

I'd just ask the attorney who's doing the title search for you to draw the necessary papers and handle the close.

Good luck and welcome to the DARK SIDE, (the ALL CASH side).

all cash