What are the steps for a cash purchase?

[Sam Collins]

Hello BP Community,

I have a question regarding what the steps are for a cash purchase of a home. Let me break the deal down a little. 

I am purchasing a house that needs a complete renovation from a close family member. I will be paying all cash for the home. But the seller offered me owner financing with very little money down so its hard not to accept this. I will be planning on doing all of the rehab myself considering I have done this for many years so I will be waving the home inspection. All my purchases up till now have been financed and this will be the first cash or owner financed property I have purchased. There will be no realtor involved also. Purchase price, down payment, and loan terms have been agreed upon already.

So my question is what steps do I follow? When and how do I request title work? I am completely unaware of the steps that need to take place next. I am assuming we would sign a Purchase Agreement, then I can order a survey, then take the survey and purchase agreement to title to close?

any help would be greatly appreciated 

[Joe Splitrock]

Originally posted by @Sam Collins:

@Joe Splitrockundefined

The purchase will be from my mother who has owned the property free and clear for the last 10 years. I am assuming there still needs to be title insurance done. She has the original copy of the deed in hand at the moment. I will be paying closing cost on the property. purchase price is going to be $30,000. I will be putting $5,000 down term length of 15 years with 1% interest. 

 You always want title insurance and title work needs to be done. Never assume anything. 

This would be considered a long term loan using AFR (Applicable Federal Rates), which is the minimum interest standard set by the IRS. I believe 1% would not be allowable, but I am not an expert on this. This is why the mortgage contract needs to be reviewed by an attorney to protect the seller and you.

https://apps.irs.gov/app/pickl...

Personally if I was doing the deal, I would just pay cash for a $30K purchase to eliminate having to deal with a mortgage contract, the seller and a lien on the property. I am guessing you will rehab and either sell or refinance it, so paying cash just makes it cleaner and easier down the road.