What Is the Process for Buying a Home With Cash

Cash home purchases are easier to manage if you can raise the funds.

Cash home purchases are easier to manage if you can raise the funds.

The benefits of purchasing a home with cash are many, from the lack of interest payments to the ease of transfer. By avoiding the interest on a standard mortgage you can reduce the overall cost of the house substantially. The process of buying a home with cash is essentially the same as buying a home with a mortgage -- minus the need to apply for and be approved for a loan.

Make an Offer

When you find the house you want, inform the owner that you will be making a cash purchase. Cash is preferred by many sellers, since the deal is not contingent on a third-party loan that may or may not come through. A cash buyer is a serious buyer -- and one who can follow through. Some buyers use this position of strength to work the price of the home a bit lower -- sellers often prefer what they perceive as "a sure thing" at a slightly lower price than a deal that requires the buyer to obtain financing, even if that buyer offers the asking price.

Make a Deal

Once you arrive at a price, it is time to inspect the property. Licensed, professional inspection services can do the job and leave little doubt about the exact state of the home and property around it. Once the inspectors have given the house their blessing, you can proceed with a fair amount of confidence that nothing is seriously wrong with the house. If the inspector discovers serious problems, you can still walk away from the deal, provided your approval of the inspection was a contingency of the contract you signed. If the inspector discovers minor problems but you still want the house, you can renegotiate the deal with the seller, either for repairs or for a lower price.


Like inspections, cash buyers often make their approval of an appraisal another contingency of the deal. If you were applying for a loan, the lender would require the appraisal, to make sure the home was worth more than you intended to borrow. In a cash deal, you want the same peace of mind: you want to know that the house is worth the price you're paying. If the appraisal comes in low, you can renegotiate the deal, or you can choose to walk away. The cost of the appraisal will be in the hundreds and the savings it can provide may be in the thousands. Professional appraisers will take into account the size and condition of the home and property and compare it with other properties in the area to come to an appropriate market value.


When the inspections and appraisals have been completed, you have arranged for homeowners insurance, and all the other routine paperwork -- such as the title search -- has been completed, all that's left is the closing. When buying with cash, you have more flexibility about when you close, because you do not need to wait for a lender to schedule the date. You will have set a tentative closing date with the seller at the time you struck the deal, however. At closing, you need to sign papers and bring a cashier's check in the amount of the balance due.


About the Author

Robert Morello has an extensive travel, marketing and business background. He graduated with a Bachelor of Arts from Columbia University in 2002 and has worked in travel as a guide, corporate senior marketing and product manager and travel consultant/expert. Morello is a professional writer and adjunct professor of travel and tourism.

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