Buying a House with Cash

[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.