Whether you’re a first-time seller or you’ve done it a million times, the real estate closing process can be complex.
There are a lot of parties involved, including the buyer, the buyer’s real estate agent, lenders, an escrow company, a title company, and sometimes a real estate attorney.
Luckily, when you accept a cash offer on a house, the selling process is a bit simpler, there are fewer parties involved, there is a bit less paperwork, the timeline can be expedited, and the risk of the deal falling through can be lower.
What is an all-cash offer?An all-cash deal is when someone buys a house outright, without financing. To close, they transfer the funds electronically or with a cashier’s check.
All-cash offers typically come from two types of buyers: individual buyers (who plan to live in the home themselves) purchasing without the help of a bank, and real estate investors, who can also be called iBuyers.
What is the standard real estate closing time?Because a lender isn’t involved, the closing time for cash purchases can be shorter.
Once you’re under contract, a cash sale can close in as few as two weeks, just enough time for the title and escrow companies to clear any liens, provide insurance, and get paperwork ready.
The typical closing time for a financed purchase (one where the buyer is taking out a mortgage on the home they’re buying) is at least 30 days.
Other popular closing time frames are 45 and 60 days, which are agreed upon by the buyer and seller, and usually chosen to align with relocation plans or another real estate purchase.
Here's what you can expect to review and sign:• Final closing instructions: A detailed outline of the tasks your escrow company is responsible for, and the process they’ll follow to complete your closing.
• HUD-1 settlement statement: Required by federal law, the HUD-1 is a detailed accounting of all money involved in the deal. It includes everything you will have negotiated up to this point, and more: sales price, payoff balances, pro-rated tax and utility bills, and more. You’ll want to keep this form for your taxes. Make sure to have your closing agent go through line by line before you sign so you can check for errors.
• Certificate of title: In this document, you sign to swear you have the right to sell the property.
• Title deed: The deed is the piece of paper that actually transfers ownership to the new owner. You’ll sign it at your closing, but your transaction will actually be considered closed when it’s recorded at the county courthouse.
• Loan payoff statement: If you have a mortgage on the property you’re selling, this document shows how much you owe to your lender as of closing day, which should match the amount the escrow company is going to pay off on your behalf.
• Mechanics liens: On this document, you swear that there are no additional liens on your property from contractors or laborers.
• Bill of sale: If you and the buyer have negotiated any additional items into the deal — these items will be outlined here.
• Statement of closing costs: By signing this document, you state you were told about all closing costs and other fees ahead of time.
• Statement of information: You swear that you are who you say you are.
What is the process of closing?1. Sign the contract
The first step in closing is accepting your buyer’s offer and completing a Purchase and Sale Agreement contract — commonly known as “going under contract.”
2. Verify proof of funds
Since your buyer is using their own cash to close the deal, you’ll want to make sure they actually have the money available. Typically, you’ll ask for earnest money up front (usually 1-2 percent of the sales price) and request proof of funds in the form of bank or investment statements. Your real estate agent can help facilitate this process.
3. Hire title and escrow companies
Depending on the state, you might choose the companies, or the buyer might. A title company is responsible for making sure the property lines are drawn correctly and that there are no property liens that need to be addressed; issuing title insurance; and, on closing day, ensuring that the actual property ownership changes hands. The escrow company is responsible for managing all closing documents, facilitating the transfer of funds, and completing the legal paperwork that records the sale. Note that sometimes the same company can handle both the title and escrow tasks.
What is a property lien?A property lien is a legal notice related to an unpaid debt. If you’ve failed to pay your taxes, child support, the settlement for a court case against you, or a contractor who has done work for you, a lien can be placed on your home until you settle the debt. Long story short: You can’t sell your home until all liens are cleared, and it’s the title company’s job to make sure there are no outstanding liens before closing.
4. Pass the home inspection
It’s common for buyers to submit their offer with an inspection contingency, which is an addendum that states that they will pay to have an inspection done, but they have the option to request repairs or renegotiate the agreed-upon sale price based on findings. Once this last negotiation is complete, you’re ready for closing.
5. Review and sign closing documents
Get your signing hand ready — it’s closing time, and a mountain of paperwork is pretty much a guarantee, even when dealing in cash.
What is needed to close an all-cash deal?Make sure to bring the following items with you to your signing appointment:
• Your government-issued ID.
• The deed, if your home is paid off.
• House keys, garage door remotes, and codes to keyless entry and alarm systems.
• A certified or cashier’s check to cover any outstanding costs that won’t be covered by your proceeds, like lien payments, property taxes, or prorated utilities. Your escrow company should let you know ahead of time if you’ll need to bring additional funds.