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How are people able to buy a house and pay every penny of it with cash? Don't you have to have stable income and something that shows where you get your money from (This is what you would have to go through when trying to get an apartment to rent)?
Hi OP. Just bought one for all cash earlier this year.
Basically you write your offer as an all cash deal. To give the seller some assurance that you have the cash, you will generally show them a liquid asset that contains enough money to cover the transaction.
Prior to closing you will wire the funds to an escrow account. By doing it that way, everyone knows the money was clean enough to get into the banking system. The title company will check to make sure funds have cleared and you're all set. You do save in fees because you don't need to pay title costs for your banker etc.
If you're looking for a home and have enough liquid cash to do so, you may want to check on local auctions in your area. These generally have to be paid in all cash with different variations of cashiers checks, which eliminates most potential buyers. It's not uncommon for people to buy something at auction from forced sellers (i.e bank foreclosures), use some cash to make it presentable, and then profit from a regular sale where people have time to get financing.
My first condo I bought was from a guy who paid all cash, and then sold it to me two months later for a 15% profit. Some people may think he's bad for doing that, but he brought the unit back onto the market in a way I or someone else could buy it. The original homeowner is released from their obligation to repay the remaining debt. Since then it's appreciated much more. So everyone wins. (Except the foreclosing bank)
It was really easy for us. Made a cash offer that was accepted. We had a request for proof of funds, which our credit union emailed to us that day. The day before we closed we were given the amount to bring to the table. This was in Arizona, so we went to the local credit union, which had shared banking with our Alaska credit union. They were able to give us a certified check for the full amount in about five minutes. The next day we closed without any problems. It was about as hassle-free as can be.
What an interesting thread. I was wondering the same thing and first thing that came to my mind is that if the house is cheap like 100k or less then it's really not unusual if someone wants to pay in cash and avoid the red tape and fees of financing and mortgage. Now after reading this thread, I'm seeing that there are so many different scenarios why one can or chooses to buy a house in cash.
Here's one that I've heard of here in Austin, TX - the parents own a paid off house, they take out a mortgage, give the kids the money to make their offer more attractive since it is now a cash offer. Kids buy the house cash, then take out a mortgage and pay the parents back.
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Originally Posted by Kevdawgg
How are people able to buy a house and pay every penny of it with cash? Don't you have to have stable income and something that shows where you get your money from (This is what you would have to go through when trying to get an apartment to rent)?
Do what I did. Sold in a high price area, took the equity and bought a couple in low priced areas.
What an interesting thread. I was wondering the same thing and first thing that came to my mind is that if the house is cheap like 100k or less then it's really not unusual if someone wants to pay in cash and avoid the red tape and fees of financing and mortgage. Now after reading this thread, I'm seeing that there are so many different scenarios why one can or chooses to buy a house in cash.
Bought a $200k house at the beginning of the housing run-up. Sold it for $550k about eight years later and relocated to a less expensive part of the country. Parked the profit in a high-yield CD and rented a small, inexpensive house while we searched for a permanent place to call home. We found it two years later listed for $275k in a nice neighborhood just down the street from my husband's workplace. Made our offer, had the bank wire the funds, and bought it free and clear.
How are people able to buy a house and pay every penny of it with cash? Don't you have to have stable income and something that shows where you get your money from (This is what you would have to go through when trying to get an apartment to rent)?
It would be very weird to have to document your income to buy a house in cash. That is usually a loan requirement, not a requirement to simply buy the house.
I suppose in theory a really strict condo, coop, or HOA might want proof of employment to approve a resident, if they have gotten burned by people not paying.
My parents made a good profit on every house they sold. They would roll the profit into the next property they bought. After doing that a few times, they were able to pay cash for a modest house and 80 acres. When they were too old to take care of the 80 acres, they sold it and bought two houses - a house for them and a rental house - and had money left over.
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