Why Cash Deals with
Easysoft Legal Software can be
a Worthwhile Endeavor
More than one-in-five residential real estate transactions are cash deals these days, according to recent figures from the National Association of Realtors. Though that ratio has been slightly decreasing as the housing market stabilizes, cash sales still account for 5 percent more of total sales than they did in 2008.
Even though the percentage of cash deals for homes fluctuates by a few percentage points each year (reaching as high as around 30 percent just a few years ago), it is a safe bet to assume that cash buyers will continue to make up a decent percentage of people buying homes for the future. Cash sales can make sense for a variety of reasons: savings on interest, sense of security, etc. In addition, cash offers are often more attractive to sellers, and in a highly competitive market, buyers know that making such a bid could be a tie-breaker.
What does that mean for real estate attorneys and small closing firms? If you are not prepared to facilitate such transactions, you are missing out on potential business, especially because cash deals are generally faster and less complicated than those using a mortgage company or other lender. Of course, the attorney or closing company prepares all documents needed for any deal not having a loan. While the process is relatively simple, it may be daunting if you do not have a great amount of experience with cash deals and are more comfortable working in tandem with a loan officer.
Let easysoft make cash closing easier
The Easysoft Legal Software Cash-to-Close Calculator can assist agents and attorneys, so they can cleanly and accurately display total costs for the deal. The Easysoft Legal Software Calculator can break down cash-to-close costs eight ways before giving the buyer and seller a total close-to-cash amount. It works for cash deals, as well as transactions using a lender. Here are the eight figures the calculator compiles on the easy-to-read final sheet:
- Total Closing Costs
- Closing Costs Paid Before Closing
- Closing Costs Financed (Paid from your Loan Amount)
- Down Payment/Funds from Borrower
- Funds for Borrower
- Seller Credits
- Adjustments and Other Credits
Cash sales will not need all of the above categories, but both buyers and sellers will appreciate having an easy-to-understand ledger, regardless of what kind of transaction is taking place. While one advantage of a cash sale is fewer closing costs, there are still some costs associated with cash deals – after all, traditional closing costs are much more than just a mortgage application or loan origination fee. There will be fees for any inspection or appraisal agreed upon for the deal, warranty and title insurance (though a lender policy will not be required), the title search and any required government transfer or recording fees. Do not forget about notary and escrow fees, the latter is important to the closing agent for the deal.
How to facilitate a cash deal
Some cash buyers out there have done such a thing before; after all the cash-only route is popular among real estate investors. They will know what to expect with your transaction. There are likely others who will not understand how a cash sale really works. It will be up to you to not only ensure that the deal is finalized but to also explain the process to the customer.
Instead, cash deals normally include an Earnest Money Deposit, which is held in escrow as you, the closing agent, finalize the transaction. That money is supposed to show the seller that the buyer is serious about the offer and can fund the cash deal as promised. The deposit is eventually applied to the total final cost of the transaction. As the deal gets closer to completion, it is up to the closing agent to notify the buyer the rest of the money is required to finalize the sale. In most cases, the money is simply transferred from the buyer’s account into the escrow fund. Once the final costs are calculated and the transaction becomes official, the closing agent will then turn over the sale price to the seller. After actual closing costs are calculated, it is possible that there will be money left over in the account to credit back to the buyer. Though most cash purchasers know this, if it is their first cash deal, it is nice to remind them that fees such as property taxes and HOA fees that are normally rolled into a monthly mortgage payment now must be taken care of independently.
Serving as the escrow agent for all-cash sales can certainly be a worth a real estate attorney’s time. There are less hoops to jump through, and they generally are quicker to close. Even though such closings might be intimidating at first, the Easysoft Legal Software cash-to-close function, as well as the rest of the automation software, will help you deliver a professional experience to your clients during their cash deals. Contact Easysoft Legal Software to be better equipped to handle any sort of transaction – cash sales included.