How long will it take to close a house with cash in 2023? Here is your timeline (2023)

Why pay cash for a house?Mortgage interest is tax deductible, and many homeowners appreciate the deduction. If you just pay the deposit in cash and withdraw amortgageFor the rest of the purchase price, you keep more money in your pocket. However, a cash offer has advantages.

In a crowded market, paying cash can help you outperform other homebuyers. Sellers tend to prefer cash deals because these deals close faster.ByronFord, an agent inNew Bedford, Massachusetts sells 76% more single-family homes than other realtors in their area. Given the persistently low supply of homes on the market in recent years, there has been a sharp increase in cash listings.

Even the most challenging market conditions of 2023, as described byTop agents interviewed by HomeLight, the attractiveness of cash offers has not diminished. In fact, although the volume of real estate transactions has increasedreduceand the stock rose, the stock is still relatively tight. By the end of 2022, the National Association of Realtorsestimateda 3.3-month supply of homes on the market (considered a 6-month supplybalanced).

This keeps the market competitive, which is reflected both inPersistently high house prices, despite the economic downturn and the continued ubiquity of cash businesses. The National Association of Real Estate Agentsreportedas of November 2022, cash offers made up 26% of all home purchases, up from 24% a year earlier (and before the market downturn).

Ford speculates that this is likely due to "the competition we face right now. People know there are far more buyers than real estate." While for sellers it's all cash at closing, "with a cash offer, you don't have to go through the bank's evaluation or approval process, it's cleaner."

But aside from getting you to the closing table faster with cash, another benefit of a cash offer is that it saves you money in the long run.

Michael Simkin, a Florida realtor who worked on 69% more single-family homes than the average Florida agentApollo Strand, think that the advantage of paying cash instead of a mortgage to buy a house is that you savefinal costs. He estimates he could save $5,000 to $6,000 in closing costs on a $200,000 home.

Paying cash saves money, and you may need a place to live sooner rather than later. But how long does it take to close on a home with cash compared to a traditional loan?

set standards

If you are buying a home with a standard mortgage, it will take about 10 minutes to complete.50 roofs, according to the December 2022 Mortgage Technology Source Information Report. Why is it taking so long?

Buying a home is a big financial transaction with many legal ramifications. All parties involved need time to do their due diligence. However, most of the time is spent on loan underwriting and processing.

A cash buyer can skip everything mortgage-related, from property appraisals to income verification, saving a lot of time. But there are still some loose ends the cash buyer must tie up before rushing to the closing table.

A cash sale: from start to finish

Every home sale has its quirks, but generally "a cash sale can be delivered in a week or two," according to Suz Poepke Pohl, owner and manager ofTitle by Cygnetureduring the past 10 years. A spot sale allows you to skip a few steps in the typical closing process.

Here's roughly how long it takes to close a home for cash.

Cash buyer makes offer and seller accepts: 1 day

Making an offer and accepting it works like any other home sale, except you're asking for a discount. If the seller needs to close urgently, he may be willing to do so.Negotiatea lower price in exchange for a quick deal.

Simpsons Notes:

"If you can make a cash offer and close quickly within 7 to 10 days, it certainly makes sense for the seller who has a payment at the end of the month or needs to act quickly."

Acash offerIt can also work in your favor if the landlord has made an offer on another home and you need a solid offer on your home to move forward.

The seller must verify that the cash buyer has the money to buy the house: 24 to 48 hours

With a mortgage, the bank verifies that the buyer has the mortgage.Depositavailable to close. Without a lender to verify funds, the seller is likely to ask for proof of funds andserious moneyfrom the buyer

Some cash takers may provide this information along with their credit cardOffer letter; others may need to contact their bank and arrange for a funds check. This can be done before the cash offer is made to speed up the process.

Title Insurance and Escrow Service: 1 day

The trust company holds all the money while the deal is going on, just like any otherserious moneyYou are a third party in its proceedings, ensuring that all terms of your real estate transaction are met. Many companies combine title and custody services under one roof because their functions are closely related.

Your agent can help you find one.title companyHandle title research and title insurance, which is always recommended. This task can occur while you are receiving the money check (if you haven't already) as your bank needs information on where to transfer the money.

Send deposit: 1 day

A security deposit proves your willingness to take advantage of the offer. In some cases, the seller may violate the terms of the sales contractsave your accumulated money. The deposit can be a fixed amount or a percentage of the total sales price.

Whether you arrange a wire transfer or write a good old-fashioned check, it takes at least a day for the deposit to clear. Once you are in the escrow company account, you can proceed.

Title search: 3 days

ANDsuch a titleCheck a home's title history to ensure there are no outstanding liens or heirs listed on the title. even in acash business,You "still need to make sure the property is free of liens and issues of ownership," says Pohl. Failure to verify a clear title can lead to financial and legal problems later on.

Although this usually only lasts a few days if the house is occupied by amortgage processor short selling, it may take longer.

Mortgage lenders purchase title insurance for themselves; It's a good idea for buyers to do the same. Before Pohl became a trustee and bought his first home, he didn't buy title insurance. Years later, when the time came to sell, a title search revealed a pending judgment against the property. Although it was not his debt, he had to settle it in order to sell the house.

Inspections: One week to mark; 2 to 4 hours ready

Cash buyers can opt out of the preview on their deed of sale, but it's a good idea to have the property previewed "for informational purposes only". This wording in a purchase agreement assures the seller that he will proceed with the purchase even if the home inspector finds problems.

EInspectionIt can identify a serious hidden problem that could affect the home's value. They also want to know what you're getting into in terms of patches, updates, and approvals. It can take up to a week to schedule a standard inspection, and most inspectors spend two to four hours indoors. Specialized inspections such asKanalreichweite oder Radotest, it may take longer.

Rating: 15 minutes to 5 days

EAssessmentA cash settlement doesn't require that, but Simpkins says, "Unless it's obvious they're stealing, I think they should do an appraisal." He notes that most spot buyers buy no more than once a year and have less experience in the market. Even if you close five to eight houses a month, you'll still get oneAssessmentwhen he made a cash deal.

It's a good idea to ask for feedback and include it in yourpurchase contractto ensure the home is worth the full purchase price. If you work with a lender, the appraisal fee would be part of you.final costs; otherwise,Assessment costs between $300 and $900.

An assessment can take anywhere from 15 minutes (for a desktop assessment) to two weeks, including the time required to write the report. This time frame depends on many factors such as: B. The level of activity in the local market and how easy it is for the valuer to find itcomparable home sales.

when at homeRate lower than purchase price, it is up to the cash buyer to continue the deal unchanged or renegotiate. Ford says, “The biggest delay we had was getting the appraiser out; It's been two or three weeks before they can make an appointment," which may extend the closure a bit.

Final tour: 1 day

The day before the scheduled closing, you and your realtor will take a final tour. Your agent will walk you through the home to ensure the previous owners are fully vacant and move-in ready. If sellers agreed, repairs afterHausinspektion, you need to check whether they have been carried out.

Essentially, you're making sure the house is in the same (or better!) condition that you agreed to buy it in.

Closing: 1.5 to 2 hours

When all these tasks are completed, it's time to close. With no mortgage paperwork to sign, this should be easy enough - less than an hour and you're done. But Pohl saw somecierresif the buyer paid cash for more than three hours due to abusive sales contracts.

In one case, he says, the parties “were in and out; They didn't have a realtor® and a duly signed invoice. In the end, the buyer paid the seller's fees so we could close it." While you can skip a few steps with a cash settlement, you still need experienced professionals to help you with the paperwork.

add it all up

When you add it all up, that's the fastest time to close a cash deal: about two weeks.

Going ultra-efficient could save you some time: Ford says it was therecash transactionsclose as fast as seven to ten days. Keep in mind that many of these steps, such as B. an appraisal and home inspection, can be performed concurrently.

What can extend the term in cash purchase?

Despite your and your agent's best efforts to get a quick deal, things can happen. Here are some common situations that can add days to the closing process.

burden on the house

Unfortunately, not all title searches return a unique title. The title company can meet standardproperty taxesor appraisals, an unpaid contractor's lien, or unpaid debts from a homeowners association. The sale cannot be completed until these liens are settled.

Competition

What if the seller has filed for bankruptcy? Then they may have to get the court to approve the sale.

When someone is no longer alive in the title

If someone listed in the title is deceased, there are a few extra steps you need to take to get a clean title. Additional documentation required depends on whether the estate has been settledstate.

If not all heirs are verified and not all agree to the terms of the sale, it can delay the process. If the deceased had a mortgage or reverse mortgage on the property, this is another hurdle to overcome.

seller's dishonesty

Unfortunately, sometimes people lie during the home selling process. A seller may have intentionally omitted something from its disclosures (in states that require them) or attempted to conceal a material deficiency. The title companyhome inspectorYou may encounter an issue that slows down sales while you work to fix it, or you may choose to give up.

option periods

If you're worried about buying your home, if you're in a hurry, or nervous about spending so much money, your realtor may suggest adding an option term to your lease. During this period, you can change your mind. Option periods generally allow you to walk away from the sale without legal or financial issues.
Keep in mind that many sellers in an active market do not like option periods, even if you are paying cash.

low ratings

If you pay cash, the rating is not as important. You do not need to appraise the home to qualify for a mortgage. However, it is not a comfortable feeling to buy a house for more than it may currently be worth.

Yes, oneThe rating is low, you have few options. You can try to renegotiate the price, request a different quote or cancel the purchase.

What if you don't have money?

In early 2023, the average selling price of a home in the United States increased542.900 $. You might be wondering: how do people pay cash for houses?

One way to do this is with HomeLightcash offer.

Here's how it works: We make a cash offer on your dream home and buy it for you. We then sell it to you after we get the financing so you can buy it. Without financial contingencies, the house has a better chance of winning.

It is possible to buy a house in cash and advance the sale quickly. When you work with an experienced team of real estate agents, escrow agents, and title companies, closing the deal on a home you're buying with cash is much easier than working with a lender.

Header image source: (Vidar Nordli-Mathisen / Unsplash)