How Long Does It Take To Close On A House With Cash

by | Dec 4, 2023

Purchasing a house with cash is an entirely different game from traditional real estate transactions. The conventional route involves mortgages, appraisals, and financing hurdles. A cash transaction can streamline the home-buying process significantly.

Just how quickly can this process be?

“How long does it take to close on a house with cash?”

Your Answer: You can close on a home in as little as 72 hours, but the process from offer to closing usually takes 2-3 weeks.

Purchasing a house with cash is an entirely different game from traditional real estate transactions. The conventional route involves mortgages, appraisals, and financing hurdles. A cash transaction can streamline the home-buying process significantly.

Just how quickly can this process be?

“How long does it take to close on a house with cash?”
Your Answer: You can close on a home in as little as 72 hours, but the process from offer to closing usually takes 2-3 weeks.

Let’s spend the rest of this article justifying our estimation. There are about ten steps in the cash sale process.

The Standard Home Selling Process

You can expect closing on a house to take 30 to 45 days from the date of the signed purchase agreement. However, this timeline can vary based on market conditions, the type of mortgage, and other factors.

  • Loan Application and Pre-Approval: This can take a few days to a week. Getting pre-approved before making an offer can save time.
  • Offer and Negotiation: This step can be quick, often a matter of days, depending on how fast the seller responds and how much negotiation is involved.
  • Inspection and Appraisal: The home inspection usually happens within a week of the seller accepting an offer. The appraisal can take 1-2 weeks, depending on the appraiser’s schedule and property complexity.
  • Underwriting and Loan Approval: This is often the longest step, taking 2-3 weeks. The lender reviews the borrower’s financials and the property details.
  • Final Walkthrough and Closing Preparation: This can take a day or two, usually a few days before the closing.
  • Closing Day: The actual closing day involves signing a lot of paperwork. This usually takes a few hours.

Cash Closing Process

Let’s break down each step in closing on a house with cash.

Negotiating

Negotiating a cash offer for a house typically takes less time than a traditional home sale involving financing. A seller can respond quickly to a cash offer. This is because there’s no buyer’s loan approval. Often, in cash-sale situations, both parties are motivated and agreeable. Cash offers are more straightforward and appealing to sellers who desire a quick sale.

How long: Expect this process to take anywhere from a few hours to a few days.

Verifying Proof Of Funds

When a buyer makes a cash offer, they must provide evidence of their ability to complete the purchase. This can be in bank statements, money market accounts, or other liquid assets. The seller or agent reviews this documentation to ensure the buyer has sufficient funds to cover the purchase price. The verification process is generally straightforward and quick, involving reviewing readily available financial documents.

The speed and simplicity of this process are vital advantages of cash transactions, as they significantly reduce the time and complexity involved in the sale.

In contrast, a traditional home sale that involves mortgage financing requires a more extended and complex process for verifying the buyer’s financial capability. This process includes the initial pre-approval for a mortgage and a detailed examination of the buyer’s creditworthiness, employment history, debts, and other financial factors by the lender.

The mortgage application and approval process can take several weeks to months, depending on various factors, including the lender’s backlog, the buyer’s financial situation, and the specifics of the mortgage product.

How long: Verifying proof of funds for an all-cash offer on a house usually takes a few days to a week. If the buyer’s ducks are in a row and you trust them and/or their agent, this can be done in a few hours.

Singing The Contract/Purchase Agreement

Once the seller agrees to the buyer’s offer, the buyer’s agent will create a purchase agreement. Most agents have a purchase agreement template created by an attorney they work with. Your title company will need the purchase agreement for you to give your earnest money deposit.

How Long: If the stars align, you can have a purchase agreement in your inbox within a few hours. However, it usually takes a few days for a real estate agent to create it if they’re busy.

Note: In a traditional home sale, the financing company will request an appraisal immediately after the buyer signs the contract. There’s no legal obligation for a cash buyer to order an appraisal, which can take a few weeks.

Secure Title & Escrow

The home is officially under contract once the buyer signs the purchase agreement. The immediate next step is to make an earnest money deposit. Earnest money is usually due within three days of a signed and accepted offer. The money is usually delivered to and held by the escrow company. Escrow companies act as a neutral third party to collect the required funds and documents.

In most parts of the country, title and escrow companies are the same. While holding your escrow, they’ll search for the home’s title. A title is the ownership record of a property. The house title shows ownership records of the property, who’s owned it, and any liens on it.

The title company needs to fully clear the title for you to own the home.

How long: Title search can take as little as a few hours but usually takes 1-2 weeks. Liens, divorces, property line disputes, typos, and the property’s age.

Inspection

If you’re selling a property sight unseen, the buyer may forgo any inspection contingencies. However, this is rarely the case with cash offers. Most cash buyers still want to inspect the property.

Home long: Home inspections typically take 2-4 hours. After that, the inspector will need 3-4 days to produce a report. It can take a few weeks to schedule an inspection, so you should start your search for an inspector while securing the title.

Final Walkthrough

The day before closing, you and your agent will do a final walkthrough. You’re looking for the home to be move-in ready and the previous owners to be moved out. If you’re buying a home for cash, you may not be moving in but renovating. In this case, you’ll have your list of items to look for.

Closing

Your closing appointment will take anywhere from 30 minutes to two hours.

Things That Can Slow Down The Process

  • Low Appraisal: The buyer may request an appraisal to verify the property’s value. They may request that you accept a lower bid if it’s lower than their offer.
  • Liens: A lien indicates that some form of debt remains unpaid. Selling your home may lead to debtors receiving part of the sale proceeds. This can also slow down the sale process.
  • Seller Dishonesty: Can lead to mistrust, prolong negotiations, necessitate additional inspections, cause legal complications, and ultimately deter potential buyers, slowing down the sale process.

Frequently Asked Questions

What happens at closing when paying cash?

Paying in cash allows you to skip mortgage and lender documents. You still need to sign a lot of legal paperwork.

Here’s what you can expect:

  • The settlement statement
  • Deed
  • Bill of Sale
  • Affidavit of Title
  • Tax documents
  • Appraisal fees
  • Title insurance

As far as paying for the property, you can do so with a cashier’s check, certified check, cash, credit or debit card, personal check, or wire transfer.

Does The IRS Know When I Buy A House With Cash?

Yes. Federal law requires all transactions over $10,000 to be reported on IRS Form 8300 (Report of Cash Payments.

Plus, every jurisdiction in America will require that you sign specific documents that will eventually make their way to the IRS. Your escrow officer, closing attorney, or agent may file Form 1099-S with the IRS (Proceeds from Real Estate Transactions)

How Much Less Should You Offer On A House When Paying Cash?

We Buy Houses in Massachusetts, so we have a formula for how me make an offer on homes that you’re free to steal. Our exact formula helps us make fair offers to homeowners who usually want to sell their property ASAP.

Our Offer = After-Repair Value – Cost of Repairs – Selling Costs

We’re a business, we calculate making a minimum profit in our offer. If you’re buying a house with cash to live in. You can offer specific advantages to the buyer. We wrote an article discussing why a cash offer is better for sellers in some situations.

Pro Tip: Attend the inspection to ensure the inspector does a thorough job. It should last 2-3 hours. Tell the inspector your plans for the property (move-in ready vs. fixer-upper) and read the full report. 

Massachusetts-Specific Home Requirements

  • Title 5 Inspection: Massachusetts requires a Title 5 inspection for properties with private septic systems. This inspection ensures the septic system meets state environmental standards and must be done before selling a property, expanding its footprint, or building additional bedrooms.
  • Lead Paint Law: Massachusetts requires homes built before 1978 to be inspected for lead paint. If lead is found, it must be disclosed, and landlords must remove or cover lead paint hazards if a child under six resides in the property.
  • Smoke & Carbon Monoxide Detector: Before a property can be sold, it must pass an inspection to ensure compliance with Massachusetts’ smoke and carbon monoxide detector regulations. Certificates from local fire departments are required at closing.
  • Transfer Tax (Stamp Tax): Massachusetts imposes a real estate transfer tax on property sales, commonly known as a stamp tax. The tax rate is $2.28 per $500 of the purchase price, paid by the seller at closing.

Step 8: Homeowners Insurance

Homeowners insurance is mandatory if you have a mortgage and must be in place before closing. This insurance covers various risks, including damage from fire, theft, and natural disasters, as well as liability for accidents on your property.

Standard policies often include dwelling coverage, personal property coverage, liability protection, and additional living expenses if your home becomes uninhabitable.

There are different levels of coverage, such as:

  • HO-1: Basic policy covering specific perils.
  • HO-2: Broad policy covering more perils than HO-1.
  • HO-3: Special policy that covers all perils except those explicitly excluded.
  • HO-5: Comprehensive policy offering the most extensive coverage.
  • HO-6: Condo insurance.
  • HO-7: Mobile home insurance.
  • HO-8: Older home insurance.

By comparing different policies and providers, you can ensure you get the best protection for your new home.

Step 9: Closing And Walkthrough

The final walk-through typically occurs on the closing day to ensure the property is in the agreed-upon condition. During this inspection, confirm that all personal items have been removed unless specified otherwise in the contract, and check for any new damages. Conduct the walk-through during daylight hours for better visibility. 

Be thorough:

  • Flip all switches
  • Turn on faucets to check for leaks
  • Run all appliances
  • Test the garage door opener
  • Open and close all doors
  • Flush toilets
  • Run the garbage disposal and exhaust fans
  • Inspect ceilings, walls, and floors.
  • Test the heating and air conditioning systems.

At The Closing Table

You will review your Closing Disclosure form at closing, which you should receive three business days before closing. Compare it with your Loan Estimate to check for major changes or inconsistencies. Some fees are legally restricted from increasing by more than 10%.

Consider having a real estate attorney review these documents if desired.

On closing day, meet at the title company. Being on time is crucial, as appointments are often scheduled back-to-back. Bring your photo ID, a cashier’s check (if required), Closing Disclosure, and any other requested documents. 

During the closing, you will sign several key documents:

  • Closing Disclosure: Details all the costs and fees associated with your mortgage, received at least three business days before closing for review and comparison with your Loan Estimate.
  • Promissory Note: A legal document where you agree to repay the loan amount over a specified period, including the interest rate and payment schedule; your promise to pay back the loan.
  • Mortgage (or Deed of Trust): Secures the promissory note and gives the lender a claim against your home if you default on the loan; outlines the mortgage terms, including the loan amount, interest rate, and repayment terms.
  • Deed: Transfers property ownership from the seller to you; includes a property description and is signed by the seller.
  • Settlement Statement (HUD-1 or ALTA): Provides a detailed list of all costs associated with the home’s sale, including buyer and seller costs; reviewed and signed by both parties.
  • Affidavits: Various affidavits may be required, such as confirming your identity, stating the property will be your primary residence, or ensuring no undisclosed liens or judgments.
  • Title Documents: Ensure you receive clear title to the property; may include documents related to title insurance, which protects you and the lender against potential legal issues with the property’s title.
  • Initial Escrow Disclosure: This document outlines the escrow account details, including the amount you need to deposit and what it will cover (e.g., property taxes and insurance).
  • Loan Application: Review and sign a final version of your loan application to confirm that all information is accurate and up to date.
  • IRS Form W-9: Used to provide your taxpayer identification number to the lender for reporting interest paid on the mortgage.
  • Homeowners Insurance Verification: Proof that you have secured homeowners insurance for the property, typically required by the lender.

Get One-on-One Guidance

Contact us below or call (978) 228-1068 to speak with us about selling your home fast.

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Elie Deglaoui - Author

Author

Elie Deglaoui

Elie is our office admin who handles all our day-to-day tasks and makes sure we always stay on track. He brings his love of music and sports into the office everyday to always liven up the environment. His outgoing personality makes it easy and fun for him to talk to homeowners, homebuyers, and everyone in between.

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