Have you been considering selling your house to a cash buyer? If it’s your first time making a home sale, the home buying process can seem overwhelming, especially when dealing with a cash purchase. However, the home purchase process is not as complicated as it looks. Read on to learn what the cash offer process for a house entails.
How Long Do Cash Home Purchases Usually Take?
One of the benefits of selling a house to cash buyers instead of through a real estate agent is a faster closing time. Home sellers who sell through real estate agents have to deal with a lot more hassle, such as an inspection contingency, pre-approval from the mortgage lender, and more.
All that can drag out the selling process and push off the closing date, especially when the real estate market is very competitive. Even in a seller’s market, a typical real estate transaction involves open houses, home repairs, and more.
With a cash sale, the closing process is a lot quicker. While the buyer might want a quick inspection and proof of funds, they won’t usually require as many repairs as a regular realtor. While a mortgage loan almost always requires a home inspection to ensure the new home is suitable for living, some cash buyers are happy to buy houses as-is.
Typically, a cash home purchase takes a few days to a few weeks. However, since fewer contingencies exist, the closing day can be just a few days later or even the same day. The advantage of cash home sales is that the buyer can work with you on your schedule and at your convenience.
Cash Home Buyer Laws in Tennessee
The good news is that Tennessee is not one of those states that require you to involve a lawyer in the home selling process. However, you will still need to draft a legal agreement that affirms the real estate transaction and its terms, such as the purchase price. Both parties must sign the contract for it to take legal effect.
Fortunately, since you can get the entire asking price upfront, the agreement is often a lot simpler than when selling via traditional methods.
For example, you probably won’t have to deal with the terms of the interest rate, unless you’re offering some kind of financing to the buyer. Financing for cash sales is rare and typically only happens when selling to someone you know, such as a relative.
You will also need to provide the seller with a disclosure. The disclosure must detail any defects in the home, such as structural damage and issues with the heating system. It should also disclose neighborhood issues, like excessive noise, and details regarding lead-based paint hazards if the house is from before 1978.
That allows the buyer to decide whether the sale price matches the market value or whether they should negotiate for a lower price. The buyer might also want an independent valuation to ensure they get their money’s worth.
While you don’t need to hire a lawyer, you might consider doing so, especially if there are details that complicate the selling process, such as the home going into foreclosure. You should also read the full Tennessee Real Estate Law And Practice Section of the 2021 Chambers USA Regional Real Estate Guide.
The Cash Offer on House Process in TN
The cash offer process on a home in Tennessee is relatively straightforward. Mostly, the process is the same and includes the following steps. Note that as long as both parties are willing and eager to close the deal, these steps don’t have to take long.
Contracts and Other Pre-Sale Documentation
To start the process, you’ll need to draft a contract. This contract is a purchase agreement that specifies who the buyer is, who the seller is, and what the terms of the agreement are. It will include a sale price and possibly some contingencies, such as a home inspection to ensure the home is in working condition. Both parties will sign the agreement.
Of course, you will both have to agree on a sale price first. Some negotiation might happen, but most cash buyers are willing to offer you a fair price without too much hassle and back-and-forth.
The buyer might use a title company to obtain a title search on the home using public records. If there are any liens on the house, they will appear in the title search. The same goes for easements and other title restrictions that may affect the buyer and their ability to have unrestricted access to the home.
What other documentation do you need? You might want to get a title insurance policy, a type of indemnity insurance that will protect the buyer from financial loss due to errors in the title search and other defects in the title. You only have to pay a one-time premium to get title insurance.
You will also need a seller’s disclosure, as I mentioned above, to ensure the buyer is aware of any defects in the home.
The seller needs to provide documentation as well, mostly proof of funds. Proof of funds can come in many forms and can include a bank letter or financial statement that affirms they have access to funds that cover the cost of the home.
Even though you’ll be providing the buyer with a disclosure, they might want an independent inspection to ensure they know what they are dealing with. While cash buyers won’t always require you to repair any issues they find, unlike when selling your home through a realtor, they still want to ensure they’re not paying more than what the home is worth.
Suppose they find any structural damage, pest infestation issues, plumbing issues, fire damage, water damage, or anything else that would require additional repairs and investments. In that case, they might have to offer a lower price.
Another benefit of a cash sale is that the payment process is a lot easier because there are fewer closing costs and no bank fees. The buyer may still have to pay HOA fees, an earnest money deposit (which is similar to a down payment), escrow fees, taxes, and more.
While an earnest money deposit isn’t always necessary, it can help speed up the deal. Learn more about who pays the closing costs in a cash sale.
Closing Documentation and Transfers
Finally, you’ll need to ensure you have all your closing documentation, including the title search, signed contract, insurance, disclosures, financial statements, and more. The buyer will need to get a cashier’s check for the amount both parties have agreed upon, though they can also set up a wire transfer.
The buyer might use a settlement agent to take care of the money transfer. A settlement agent can ensure that you bring everything you need and that the transfer goes through smoothly. Many agents can also take care of the title search and other steps of the cash sale process.
When you sell your home to cash home buyers in Memphis, you’ll be able to get cash in hand within a few weeks – and sometimes, within a few days.
There are still some essential steps to adhere to, such as drafting and signing a contract, ensuring proof of funds, getting an inspection, and ensuring you have all the required documentation. At the same time, you’ll be able to save a lot of money on closing fees, and you can remove contingencies like the appraisal contingency to speed up the sale.
If you are selling a home with structural damage, selling to a cash home buyer is the best way to go. We buy homes in Tennessee, so contact us to get a quick quote!