Hello Kelly: First your closing cost as a buyer should be under $6000.00. You have the attorney fee, the appraisal fee the inspection fee the radon and termite cost.
What you should not do is tell the sellers agent or the seller that you are an all cash buyer and you should apply for a loan regardless of the fact that you are not going to utilize the bank services. This is one of those times that you are in control and you can use the banks to your advantage.
What you should do in my opinion is apply for a pre approval from a bank that you don't have any funds in. You should supply that bank with a bank statement that only had approximately the closing cost of 6% of the asking price and 3.5% of the down payment and about 5% reserve funds.
In the contract you should have a mortgage contingency just in case to protect yourself and your money. You should speak to your attorney about wording in the contract that will protect you in the event the sellers home has termites or other issues so that the seller can pick up those cost.
I would allow the bank to order an appraisal, I would hire a home engineer, termite inspector and radon inspector if the house requires those inspections.
Once you receive the appraisal from the bank and find out how much the bank would risk to loan for that particular home then you should withdraw your loan application, pay for fees you cost the bank and proceed with your cash purchase. It doesn't change the contract in any way. It just means instead of a bank loaning you the money based on your ability to pay the loan they base it properly on the value of other homes in the area that compare to the home you are interested in purchasing.
It is unfortunate that this is the way to do things but I have worked with many cash buyers and when we hire an appraiser they still ask or require the contract so they can see the price they have to meet.
If you have money in the bank or 20% down the banks use your money to off set their loss. For example if the home values at 50,000 but you offered 100,000 the bank would require you to come up with $50,000. The bank would not lend you an additional 50,000 to cover the loss.
If you have any additional questions please feel free to contact me.
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