Although the vast majority of home buyers take advantage of some type of financing, generally through a Mortgage, we often witness what is known 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, what to worry about, etc. In fact, there are at least four different possible scenarios 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 transactions: A true cash transaction means not only that a mortgage or other financing will not be needed to complete the sale, but that all costs will be paid for with readily available personal funds. When a buyer says that this will be the process, it is important that the owner/seller apply, knowing where these funds are currently located, and some clear indication and proof of the funds, before agreeing to sell. . If he doesn’t, he puts the seller at risk, because without some sort of guarantee of funds, he risks losing other, better and more qualified potential buyers!
2. Without mortgage contingency: A No Mortgage Contingency transaction means the buyer has no right to back out of the deal, with no penalties, if/when they fail to obtain a loan. Again, sellers need to protect themselves, with a significant down payment, a specific closing date, and clearly stated (significant) penalties, for failing to meet the commitment. Once again, there is a need, to see, proof of funds!
3. Without mortgage or inspection contingency: When the contract is written, with no contingencies, whether to secure a mortgage or break an agreement, based on any aspect of a home inspection, the home seller is better protected than when just one of these is indicated! ! All financial protection and collateral must still be secured, as well as this additional limitation!
4. immediate closing: When the contract calls for an immediate closing, it means that the only delay is securing a clear title and title insurance. In most cases, this means creating a closing contract, schedule, of about 30 days or sometimes even less.
The more a homeowner knows and understands, the better protected they will be! Know all the terms, have a lawyer, clearly list your protections, limitations, requirements, etc, and proceed, with a greater degree of peace of mind!
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