Trying to find out about doing out of state deal cash.

[Robert Anderson]

Hi BP members, I have someone who wants to sell me a house in Indiana. I live in Boston. I looked it up on Google earth, and also spoke with the agent who had it listed about 18 months ago. He said it’s a decent house but the 2 negatives are the roof and the basement isn’t full. He said if the roof was done and it was a normal basement it would sell for 80-90k. I don’t want to do anything to it other than cleaning it up. The owner said she would sell it cash for 45k . I asked the agent, how much can I list it for to make it sell in a few days and he said 70k (ish). I have the money but not sure how an out of state deal works. Would I have to be physically present at any point? I told the old listing agent that he can have the listing if he can get it on the market for me, however I haven’t purchased it yet. How can I pay for the house without the present owner getting hit with all types of closing costs.? There already taking a financial hit, and I don’t want to add to that. any other thoughts you want to add would be great. Thanks

[Todd Burton]

Hello Robert- 

The cash purchase of a property in Indiana can be very simple even remotely. If you use a Title company they will arrange everything required for the closing and coordinate the receipt and distribution of funds. They will also do a Title search and issue you an insured deed. You will just need to provide them with your purchase agreement, etc. There will obviously be some costs associated with this. The seller cost at this price point should be in the ~$800-$1,000 range + possible other expenses (not costs) such as pro-rated taxes. 

You certainly can avoid these expenses by just paying the seller directly and having the seller sign a "Quit Claim" deed but you run the risk of incurring any liens or other encumbrances on the property. 

A few other things of importance; with a Title company closing the law requires the money be wired if the amount exceeds $10,000. You may need to check if this is also true if you opt to not use a Title company. Also, if you do not use a Title company you will want to come here to facilitate the transaction or hire an attorney or someone you trust implicitly to act on your behalf. I would absolutely recommend the Title company closing regardless of the cost as this is the best protection for everyone and the easiest way to facilitate the money.

Note; in Indiana, the property taxes are paid in the rears. If you do not structure your purchase agreement correctly you may incur some of the tax debt. The taxes should be pro-rated to the day of closing or if you are not pro-rating you should at least know what that amount is as it will reduce your potential future profit. 

Note, while the previous agent has provided an opinion of the property, he is not an inspector and the condition may have changed in 18 months. I would recommend you have language in your purchase agreement that provides you the opportunity to have the property inspected. I would highly recommend you hire a third party home inspector to get a report and understand exactly what you're buying. It's a very inexpensive way to protect yourself (~$350). If you do not you are exposing yourself to huge potential financial liability or loss. 

Lastly, please check if the property is in a flood zone. If it is, this may reduce the desirability (and value) to future buyers because of the potential expense of flood insurance. You can easily check that by putting in the property address at the Indiana Dept of Natural Resources Floodplain Information Portal.