Cash Buyers of georgia real estatewhat "cash" should expect from a georgia real estate transaction
The good, the bad, and the not-too-different.
In general, most things don’t change; you’re still buying real estate, just without a loan.
You’ll still need to haggle the price out with the seller, as well as exactly what is being purchased. This can be done directly between you and the seller, or between any agent(s) involved.
The title to the property needs to be checked to confirm that the seller owns (and is able to sell) everything that you think you’re buying. This will be handled by the closing attorney.
You’ll need to know who will own the property at the time you complete your purchase (you individually, a company, you and your spouse, etc…), so talk to the closing attorney about how you’d like to hold title.
Any title problems would still need to be fixed prior to closing, or documentation made of how those problems are being handled (price reduction, post-closing obligations, etc…). Again, speak with the closing attorney.
You’ll need to wire the full purchase price and closing costs to the closing attorney who is acting as the escrow agent.
You’ll still want title insurance (but will save, because you don’t have to buy any for your lender).
Some things change for the better if you’re a cash buyer:
Things can move faster. Without the need to work through a lender’s process of evaluating your creditworthiness and the property’s value, you can reach the closing table much sooner.
Your offers are more competitive. Buyers using financing must satisfy certain underwriting requirements from their lender. While these requirements aren’t typically too much of a hurdle, they do require additional time to address, and occasionally, additional costs. Further, if any of the lender’s requirements are not satisfied, then then financing falls through, and the seller has to start over marketing their property for sale. Sellers like an offer that can close quickly, and with minimal risk of the deal falling through.
Your costs are lower. Cash buyers don’t pay loan origination fees, lenders’ title insurance, points, etc… some buyers would consider the interest savings by not financing a property to be a benefit, while others would consider it more advantageous to leverage their cash on hand to increase their returns on their investment. Whether you consider this a “pro,” or an “inneficiency” depends on the type of investor you are.
Some things open you up to more risk:
When you’re the deal-finder, coordinator AND put all the funds in, you’re the main risk taker. If you have all those eggs in one basket, any problem (and its solution) fall to you alone to address.
You may be more “on your own.” Often cash buyers want to control as much of their deal as possible without assistance. Cash buyers don’t have a knowledgeable financing partner to bounce ideas off of along the way, and many also elect not to use a real estate agent. A cash buyer working in this way must have the knowledge to handle their negotiations, documentation, etc… The more hats you try to wear (agent, accountant, financer, etc…), the more knowledge you must have. You will face a steep learning curve, and would need to work closely with your closing attorney, as well as with any agent(s) involved in the transaction.
Time is money and cash is king
Being a cash-buyer can help you stay competitive as a buyer in a saturated buying market.
Keep your team in mind
You’re already not using a lender, make sure you know who is handling negotiation, contract, title, accounting, and other questions.
Ask your closing attorney or other team members if you have questions. It’s better to ask your questions before putting a large chunk of money rather than after.
If you are using third-party funds other than a traditional lender, then you are not technically a cash buyer. Depending on your agreement with your third-party lender, your closing may still move as quickly as a cash-purchase, but most private lenders still have property valuation and security requirements. These requirements make sense, but raise a different set of questions. If you are using a private lender, and have questions about how to set up your next purchase, please contact us.
It’s your deal; stay involved
It’s always good to work trusted partners, agents, and attorneys, even when you’re a cash buyer. When you’re steering the deal directly, not relying on agents, lenders, or other parties, you’ll need to stay in communication with the closing attorney at every step of the process.
If you have important “deal-breaker” issues, they must be put in writing at the time you enter into your initial contract. If your inspection reveals issues, they must be addressed in a timely way.
As always, if you have questions, please contact our office with any questions.
What to expect from your cash closing
You or your agent must negotiate the terms of your purchase with the seller. You’ll either relay the final contract to the closing attorney, or relay the terms of the contract to the closing attorney, who can assist in preparing the contract document itself.
Once the Contract is in place, the closing attorney will check the status of the title to the property, and verify that the seller is able to give you what you are buying. If there are defects, liens, estate issues, or other problems, the closing attorney will let the parties know.
Wire your funds to the closing attorney, and execute the closing documents; the seller will do the same. The closing attorney will disburse the funds not only to the seller, but to any other vendors, utilities, tax authorities, etc… Once all that is done, the attorney will send you a copy of your newly recorded deed!