Although, the vast majority of home buyers, take advantage of some sort of financing, usually, using a Mortgage, we often witness, what is referred to, as a Cash Sale, or a No – Contingency Purchase. Many times, these terms are used, interchangeably, because, real estate agents, are simply, trying to indicate, there will be, no mortgage, to be concerned with, etc. In fact, there are, at least, four different scenarios, possible, and, therefore, this article will attempt to, briefly, consider, examine, review, and discuss these, in order to better understand the similarities, and differences, involved.
1. Cash transaction: A true, all – cash transaction, means, not only, will no mortgage or other financing needed, to complete the sale, but, all costs, will be paid for, by readily available, personal funds. When, a buyer, says, this will be the process, it is important for the homeowner/ seller, to request, knowing where these funds, are presently located, and, some clear indication, and proof, of funds, before agreeing to sell. Failing to do so, puts the seller, at – risk, because, without some sort of funds guarantee, he risks losing other potential, better, more qualified buyers!
2. No mortgage contingency: A no mortgage – contingency transaction, means, the buyer, does not have any rights, to walk – away, from the deal, without penalties, if/ when, he fails to secure a loan. Again, sellers must protect themselves, with a significant down – payment, a specified closing date, and clearly stated, penalties (significant ones), for failing to live – up, to the commitment! Again, there is a need, to see, proof of funds!
3. No mortgage or inspection contingency: When, the contract is drawn – up, with no contingency, for either securing a mortgage, or withdrawing from an agreement, based on any aspect of a home inspection, the home – seller, is better protected, than, when only one of these, is indicated! Every financial protection, and guarantee, still, must be secured, as well as this additional limitation!
4. Immediate closing: When the contract calls for an immediate closing, it means, the only delay, is securing a clean – title, and Title Insurance. In most instances, this means, creating a contract – to – closing, timeline, of about 30 days, or, sometimes, even less.
The more a homeowner knows, and understands, the better protected, he becomes! Know all the terms, have a lawyer, clearly list, your protections, limitations, requirements, etc, and proceed, with a greater degree of peace, of mind!