Been searching online on how to go about buying a house with cash, can't find much info on it. Anybody out there in a position to give suggestions? What kind offer to put, how much less then the asking price? When do we say it's a cash purchase? Thank you in advance!
Not everyone will or can reduce the price of a house dramatically because you are offering cash. The key advantage that cash provides a seller, is that they do not have to worry about the buyer getting financing.
In most housing markets today, the buyer has the advantage simply because of the excess of properties on the market today.
I have always found that it is essential for a buyer to to their homework prior to making an offer on a property. How long has the house been on the market? Is there a mortgage on the house and if so, what are the details of the mortgage? Is the owner of the property making payments on time, is the house in foreclosure?
Read More Link On Right
_If you are working with a realtor, you might be able to find out about prior offers that have been made on the house. The sad fact of the matter is that a large percentage of buyers are finding it difficult to get financing based on the fact that home values have dropped dramatically across the country.
I live in the Midwest and the average home in the county that I live in, is valued 35% lower than four years ago. Consequently a high percentage of property owners are upside down on their loans.
When I say upside down, I am referring to the fact that the homeowners owe more for the house, than the house is worth.
As far as when do you mention cash? In my opinion, not until you have all your information and you know for certain what the house is currently selling for and an idea on what the buyer may take.
Don't for get to have a house inspection and do your due diligence.
Remember, you can always raise your offer. Reducing your offer is far more trouble.
Good luck with the home purchase. The US economy needs a boom in it's housing market!
I have many friends who are realtors. With that said, always' remember that the realtor is on commission and always remember that when you are paid on commission, you want to get the highest price for a house that you can because you are paid more.
I have a great site for you that will help in your search's: http://www.redfin.com
This free site will provide you with a wealth of information on properties (including selling history). You will have to give an email address, but I have not been harassed since providing mine.
The last time I used Redfin.com, I typed in an address for a house I was interested in. I immediately received 6 pages of information including how long the house had been on the market, each price drop, comps from other sales, similar houses on the market in the same area, school information, individual room breakdown etc.
When I met with the realtor, I already knew a tremendous amount about the property.
Remember one thing. You will very likely be working with an attorney to have a trust prepared after the RV. You will do this for tax and liability reasons.
Your attorney will very, very likely place your house into a trust. Talk to an a good attorney before buying any house.
In addition to tax and liability advantages, a trust will be a valuable legal tool for transferring ownership after your death. You can avoid large amounts of money (varies by state) but avoiding probate court. A trust will avoid your spouse from have to go to probate court (and paying high legal bills).
I always tell people who are looking for a cheap lawyer, accountant, or financial planner. That mistake may likely be the most costly thing that you ever do.
What kind offer to put, how much less then the asking price? When do we say it's a cash purchase?
STRATEGY REPLIES: Immediately
My wife and I bought, fixed up and sold single family houses here in Florida for 12 years until the housing market took a dump.
What Goldenfan told you is good advice. Here are the basics on buying with cash and some general info on buying houses in general. I'm not going to try and put this in a numbered sequence just give you the overview of points.
I'm assuming you are just looking at getting a good deal on houses (homes) you are looking at buying for yourself not investment.
First off, when you have cash you call the shots. Pretty much everything is negotiable, especially realtors commissions. I've negotiated a reduced rate with the title company (or attorney if that's what your state uses for closings) as well.
Basic procedure, the essence of:
Find a house you like
Put in an offer with the owner or through realtor
Both agree on price and terms and sign purchase agreement
Send purchase agreement to title company (attorney) for closing
Meet at closing office and pay for house and have title (deed) transferred to you and recorded
#1 LOCATION IS EVERYTHING! I made this screaming all caps on purpose, it's that important. Has to do with future value, safety, etc. This is not just where you think a nice area to live might be but, is it near main highways, a flight path for aircraft, behind a fire station you didn't know about before you bought or in an area that deals drugs at night or weekends (you would be surprised how many of the "best areas" deal drugs).
You can find some of this information from the local police county office, or online, crime rate and how many calls the local police get to this area. Go over there at night, 9-10pm, and on weekends to see what neighborhood is like.
Talk to neighbors, you will get an earful; they know what's going on in their neighborhood, but keep your own counsel on what you hear because many people like to be alarmists.
#2 (not necessarily sequence here) You don't need an appraisal because you are paying cash but you can get a rough estimate from http://www.zillow.com which is what most banks are using now to get an initial value. This will give you a place to start with the price you offer.
#3 A point on realtors and the contract to purchase. I basically don't like to work with a realtor but I have, because many of them have the misguided idea that the seller and buyer must never see each other before the closing table for fear they will upset each other and kill the deal.
But, as they say, "with that said" you are probably better to go with a realtor since this is not an area of experience for you. They will protect you but here's a 'heads up' and data.
There are 3 kinds of realtors, buyer realtor, seller realtor and transactional realtor (who represents both sides at the same time - not the best idea).
With that said (smile) regardless of what realtors will say you can totally negotiate commissions on both sides way down for a cash deal and a quick closing.
They are hungry right now and will not want to walk away from a deal, some money as opposed to no money. Remember they make their money on the sale of the house, higher price more commission.
The key important documents are purchase agreement (contact to buy which is binding, if you break it because you find a better deal they can sue you) and the disclosures of serious faults with the house.
You don't need an appraisal (regardless of what the realtor says because they want to give their appraiser friend some business) but you do want a "bull dog" inspector to do a thorough inspection.
This is a point of finding out everything that's wrong with the house and can be used to negotiate price or have seller fix before deed is transferred. Most property is sold as-is so make sure you get a good inspection so you know what you're getting into.
My neighbor bought a big house for top dollar a few years back without an inspection and told me he didn't realize he was getting a "fixer"; roof leaks and plumbing problems.
As far as purchase contracts, you can put it on a napkin or paper bag (I've actually done that and closed) as long as house address, purchase price with seller and buyer signed it is legal.
I wouldn't recommend that but the point is don't get hung up on the mystique of a legal contact, it's not as important as realtors make it out to be.
If you want a basic purchase agreement that's good in every state which I used for years let me know in comments and I'll attach it. The purchase agreement doesn't survive closing so whatever you want agreed to before closing has to be in it, and per judges I've talked with hand written notes initialed are more binding than printed boiler plate purchase agreement paragraphs.
#4 Make sure the title company or attorney gets a survey. They are valid for 7 years so if the one the seller has is older than 7 years you need a new one.
This gives you property boundaries and is what will be needed for any future add-ons for modifications to the land like pool addition or room addition, etc.
#5 Make sure the title company or attorney can get clear title once the loan is paid off. I shouldn't have to say this but I can count on more that one hand the times we had to go back and handle something that came up which was missed in the title search to get clear title, like a contractor that put a lien the property and was never paid off.
It's a real pain in the b*** because the seller has no interest in helping, they've been paid and are out of the loop.
That's why I always insist on meeting and establishing a good relationship with the seller WAY before we get to the closing table.
I've had whole houses of furniture and tools in the garage left with the house at no additional cost, which they were going to sell, just because they liked us and we said we could use them.
#5 Finding and getting the house you want - This may seem a little strange but you have cash to work with and if you see a house you like, and have a realtor working for you, I have MANY times walked up to a door of a house I'd looked up in county records and liked and asked them if they would be interested in selling for cash!
I bought a lot of great houses that way. Point - Every house is for sale, it's just that some sellers don't know it yet (smile). These are some of the best deals because they don't have to go through the hassle of listing it and all the details of being always ready to show.
They have a cash buyer standing right in front of them but have never told anyone they privately would love to sell and move someplace else. So don't underestimate this strategy, especially in this economy.
As side point. If there really are more than 6 million dinar holders in the US, within 6 months of the RV I expect house prices to go up so you would want to move on any house or land you would like to buy as soon as possible.
The other point, generally, is there are 2 types of property states, warranty deed and trust deed.
A warranty deed state (like Florida) is between buyer and seller directly (simple and clean) and a trust deed state (like California) has a 3rd person who is a trustee what holds title and has to sign deed over to new owner (a little more complicated).
So make sure you understand which type of state yours is. You may have to add a trustee paragraph into my purchase agreement, but no biggy.
I'm sure there is more I can give you but you will have to ask specific questions. Over the years I've run into every imaginable situation as an investor buying and selling houses.
One thing I would add is this. When you are buying a home, you want the price to be low whereas your own realtor wants the price to be high so that their commission is high.
They want to use the state Realtor-approved contracts for their services, and this ensures the languages is lined up to getting them the higher commission.
Next time, I want to either revise or amend or strike out portions of the Realtor contract. I want an amended paragraph that shows an agreed "starting price" on the house which would be our best guess at where it might be.
Then I'd add a formula that gives them their percentage if the sales price is higher BUT TWICE as much percentage for every dollar that the sales price decreases. I want them working to lower the price actively.
Disclaimer: This is not to be considered or used as "professional" advice - Please seek your own Professional banker - realtor - and attorney