What are the steps to buying a home cash? if available?

Asked by M&m, Peoria, AZ Mon Mar 28, 2011

If someone can afford to purchase a home cash as the market is a buyers home? what are the pro's and con's of doing this?

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Caroline Choi, Agent, Los Angeles, CA
Mon Mar 28, 2011
Cash is king right now so if you can swing a cash payment without utilizing a loan, then more power to you and your offer will likely have more punch behind it than other offers with loan and appraisal contingencies. Appraisals and loans are still causing delays and problems in some escrows so if you and the seller don't need to deal with these issues, then it's a win win. Also, your escrow period will likely be shorter as you don't need a full 30-45 days to go through the loan process. Good luck!
2 votes
Stew Keene, Agent, Scottsdale, AZ
Mon Mar 28, 2011
Hi M&M,

I would agree with Travis on the Appraisal point. Even if you pay cash you should always have the home appraised during your inspection period and when you do, make sure the appraiser does a "forecasted" market trend valuation that will help indicate if the surrounding home values are rising or falling. the deal on the home may look good now, but if values fall you might be thinking you made the wrong decision to buy at this time.

The use of Cash does not necessarily make an offer look inviting to a seller just because there is no lender involved and they see "green".

Most foreclosure home offers when made "cash" are nearly always assumed to be made by an "investor". The problem with this is that if you intend to occupy the home as a private party you will have to fit a certain criteria for your offer. For example, the distance from the home you are trying to buy with some lenders requires you live greater than 50 miles from the purchase property. Otherwise your purchase is considered a 2nd home purchase when using cash and HUD, Fannie and Freddy have put a limitation on the sale of a foreclosed home as "only offers from primary residents will be considered in the 1st 10-15 days. You see how this can get complex?

Short sales most of the time are good to go. The bank only really is interested in the "net" amount they will have remaining.

The REAL advantage in presenting a CASH offer to purchase however is "the time to close" If you do present an offer to a seller or Foreclosure, being able to close with 10 days to 2 weeks is big.

I hope this provides you with some insight and I wish you well with your home purchase endeavors.

Always Work with An Experienced Realtor


Stew Keene - Professional Realtor
Certified Shoer Sale Negotiator
Web Reference:  http://www.stewkeene.com
1 vote
Dallas Texas, Agent, Dallas, TN
Mon Mar 28, 2011
Confer with CPA for tax advantage,

You can close faster if required.
When you submit any sales offer you must show proof of funding which would include your bank statements for purchase price and cover closing costs

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
0 votes
Paulette/Duk…, Agent, Glendale, AZ
Mon Mar 28, 2011
Dave Ramsey would probably say. . . if you have the money, you should pay cash. The other implications have already been stated in the other responses to your question. Make it a Great Day and Enjoy Living!
Web Reference:  http://www.PauletteDavis.com
0 votes
Rick Travis, , Peoria, AZ
Mon Mar 28, 2011
One of the biggest "pros" is there are no bank complications from a buyer's perspective. Although the market is very busy in the Metro-Phx/Peoria area, one of the most difficult aspects of a "non-cash" transaction is; will the home appraise for the agreed contract price?

By virtue of hard cash, this scenario becomes a moot point and makes the cash buyer look even more valuable in the seller's eyes. Therefore, a wise seller would do well to seriously negotiate/accept a fair cash offer in this market. "Cons" would be the risk of leveraging hard cash when there is potentail that prices could fall and you cannot use this money elsewhere. This is combined with the reality that there is no tax write-off for the buyer. It should be a well thought-out and long term strategy to gain appreciation on the investment.
0 votes
Dp2, , Virginia
Mon Mar 28, 2011
The steps to buying a property with all cash are pretty much the same as they'd be for buying with financing--minus the lender involvement on the buy-side of the transaction.

A pro of buying with all cash is that the transaction is cleaner on the buy-side, and a buyer can often close quicker (especially if the target property isn't a REO or [pre]-foreclosure).

Keep in mind, you could still tap into or use the equity from that transaction in other deals. You could do that with or without taking out a home-equity loan or line-of-credit. Many investors (myself included) do this. In fact, a business partner and I intend to do this with a property that we plan to close with cash in a few days.

A con of buying with all cash is that the transaction is not leveraged, so you'd not use your cash as efficiently as you could. Yet, if you were to do something like what I suggested earlier, then you'd essentially end up being able to leverage that cash in multiple transactions anyway.
0 votes
Jason Whaley, Agent, Mesa, AZ
Mon Mar 28, 2011
The pro is that you can usually get a better discount for using cash. The cons are you don't get to write off the interest and if you need the cash for something else, it is tough to do a cash out refinance.
Web Reference:  http://www.SearchAZmls.com
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