Profile picture for PhillipMay8

Need assistance in purchasing home with cash

I'm about to settle with an insurance company for an accident that happened to me a few months ago. I'll be receiving a substantial amount of money in the end. I wish to buy me a home that i can share with my 2 children when i have them with me. I wish to just pay cash for a home since i'll have the financial means to do so. I'm only 28 yrs old and i've never purchased a home before. 

My question(s) is: 1. How much could I expect to save by buying a home with cash? 2. Should i go through a Realtor or do the deal by myself? 3. Should I buy a home with cash? Any help with this would be greatly appreciated...thanks in advance. 

 
  • July 26 2014 - Biloxi
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Answers (6)

Best Answer

As far as buying the home with cash, I believe that it would be a great idea. Avoiding a mortgage is a good thing if you can swing it. You do miss the tax benefit of the interest payment, but to me, if you can buy the home outright, that is awesome!  Now, let me advise you about actually buying the home. If you had been through the home buying process before, I might suggest you try this on your own, but with no experience, you need a helper through the contract phases. There is no substitute for the experience of a Realtor in this case. As far as getting a better deal, my experience says that you may or may not. It just depends on the seller's motivation and time frame. Since cash deals can close much quicker, that could be one of your best bargaining tools. Also, if you find a home that you want that is for sale by the owner, they may not want to pay a Realtor's fees. If that is the case, you need to make the decision if you want to pay the Realtor for their time and pay the commission yourself. Granted this is rare, but I still feel that you will appreciate the experience of someone in your corner taking your through all of the trials and tribulations of a home purchase. FYI, if it is a FSBO (for sale by owner), you will still have the right to have the home inspected. Make sure that your contract has the inspection contingency in it, so that if the inspection turns out to be unacceptable to you, you can get your earnest money returned and you cancel the transaction. I wish you all the best, and hope that this home will be a blessing to you and your family. I hope this helps.
  • July 26 2014
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Profile picture for SwarthmoreTrader
"How much could I expect to save by buying a home with cash?"

Hard to say without more details. If this is your "forever" home and you have less than great credit, you will probably save in the long run from avoiding interest payments. Consider what else you would do with that large sum of cash. If the you can invest this cash in something with a high rate of return, you may still want to use some credit to purchase a home. 

As for getting a discount from the listing price due to paying with cash, a seller willing to do that is rarer than a buyer looking to pay with cash. A home with a seller motivated to do this could be a risky situation for a first time buyer looking for a family home.
  • July 26 2014
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Great questions. The amount you pay on a home really depends on what you and the seller agree upon. I would definitely have representation when making a large purchase such as buying a home. You can buy a home with cash but make sure you can cover monthly/yearly operating expenses (utilities, insurance, and taxes) as well as any overhead like ac's or roofs that need to be repaired. You will also need to get a "proof of funds letter."
  • July 26 2014
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Profile picture for wetdawgs
Don't spend it all in one place.  If you have a large settlement, having some cash in the bank for future life events is always helpful.

How much do you save buying all cash?  nothing.   If two equivalent offers come in, one all cash and one requiring financing, the "all cash" may be the one chosen.

Find an agent who can represent you for home purchase.  Interview carefully, and study up on the process so you aren't lead astray.

  • July 26 2014
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Profile picture for JoshBarnettREIB
The Realtor member costs are already built into the price, get your own representation, it will pay off, 10 fold.  They will be able to answer the other questions.  
  • July 26 2014
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Profile picture for Outer Banks N C
Don't expect to save anything. Cash is nice but a seller can wait for 2 weeks for a loan to close to get thousands more for the house. With cash you might save a little, but not that much and maybe no extra.

You need to find a Realtor to work with and help you. The seller pays them so they are working for you for FREE, so why not get real professional help that costs you nothing?

Good luck. BTW, that cash will need to be in a bank account for a short period of time so the new lender you use can see it has been there 30 days. It's called seasoning.
  • July 26 2014
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