First home purchase - cash deal

[MATT WARDEN]

Hi,

I know this forum is mostly about real estate investing, but I also know that this is the best place to ask about the details of a cash deal. I am about to purchase my first house (I will occupy). Up until now I have been renting. I am beginning the process, plan to purchase 3-4 months from now, and I just want to make sure I understand the things I should be thinking about.

First, most likely this will be a 100% cash deal. How do I research the relevant laws/regulations around this (I live in Texas); should I expect there to be any? I seem to recall there being a minimum waiting period. Also, at what point in the negotiation process do you think I should mention that I can do an all cash deal / fast close?

How do I perform a title search, given that there will be no lender involved who will be coordinating that and just sending me the bill? What other due diligence do I need to do in this regard?

I'll hire a home inspector. Do I need a separate effort to survey and verify the property boundaries? If so, what is this person/service called.

Any other tips or considerations would be extremely helpful.

[Mike G.]

First, I don't live in Texas, but my guess is that most of what I say below is going to be common in most states. Texans, please correct me if I'm wrong here.

As you mentioned, paying all cash makes your offer more attractive to the seller because you can close more quickly (you don't have to worry about any delays that might result from having to get a loan). Also, the seller KNOWS you can pay, so they don't have to worry about the case where the loan doesn't go through or the house doesn't appraise for the offer price.

As to your question about when you should say that you are paying all cash - I can't see any reason why you wouldn't do that with the initial offer on the house. It makes your offer more attractive with no downside to the seller, so why would you keep that secret? In fact, when you make your offer, you have to identify how you are going to pay for the house anyway.

I would suggest that you use a real estate agent to buy the house. They will handle all the requirements for you, such as filling out all the required paperwork, presenting the offer and counteroffers, etc. They can also recommend an inspector, and will deal with escrow, including doing things like the title search and making sure there is title insurance. As part of escrow, you should be given the subdivision map that shows your property and the property boundaries (to a general extent) - at least this is typically done in California. If you really want to get a survey done, I'm guessing you'll have to order that yourself.

When a house is purchased using a loan, the bank requires that the home buyer purchase homeowner's insurance. There will be no bank here to require that, but you should absolutely get insurance anyway. This is another reason to use a real estate agent. They can be an adviser to you during the process and explain everything. Plus, as the buyer it doesn't really cost you anything to use an agent - both the buyer and seller agents are paid by the seller from the money resulting from the sale.

One other thing to consider, many of the people on this board are real estate investors and as such like to use leverage and debt to invest in other opportunities. Just be aware that in paying all cash for your home, you are tying up money that could be used for investment elsewhere. Understand I am NOT suggesting you take out a loan instead of paying all cash, I just want to make sure you are aware of other possibilities.

Good luck and have fun in your home search!