The bank's processes are designed to secure their lien. You're welcome to internalize more risks then they would. If this was the largest purchase of my life, I'd treat it differently then a junk home.
Cheap: GIS the PIN for free at the County website, see where they think the borders are. Reasonable: Get Title Insurance, as they will either pay for the lawsuit to defend the validity of the title, or refund your purchase price.
Cheap: When no one's watching, go out with a metal detector looking for the rebar iron rods they use for survey markers. Expensive: Pay several hundred for a survey and get into a lose/lose fight w/ neighbors. (You can as easily lose land from a mistaken assumption as gain it, and look territorial at the same time)
An competitive market analysis is one last sanity check to prevent you from overpaying, and help appeal property taxes. You can do it yourself, or any realtor will do it for free (once you own the home).
Both the good and bad news is no one is going to stop you from throwing money away.
prostoalex said: If you're happy with the price, no reason for appraisal. Same thing on the survey - those are expensive and can be skipped if you feel it's reasonable to do so. If there's not a rush ("Close in 3 days!") and a couple weeks for closing is the same to the seller.. you can make an all cash offer and still close with a mortgage. A mortgage still shows up as "cash" at closing, the funds are just provided by the lender. And you just hold your own cash available as backup to close with if absolutely necessary if the lender delays and isn't ready. Negative cost mortgage might pay you over 1% of the mortgage value beyond all third party costs, and covers appraisal, title, settlement fees (and survey, if required -- lender will usually skip on the survey if there was one done recently. In my state, the standard contracts have the seller "pay" the survey cost, if needed, anyways...). You could then pay off the mortgage in full a week later if you really want, and walk away with $1000s profit from the lender.
OTOH, if you are definitely going to save more than ~1-2% of the purchase price by closing in only 3 days with only your own cash then don't go the above route.
In 1974. I assumed a VA loan by simple assumption. The assumed loan was only a year old, I was the buyer's Realtor the previous year. I had access to all the related paperwork. For the original loan assumption, only a termite inspection was done. That inspection found a termite mound on the property, but no damage to the home at that time. When I got a remodeling loan, termites were discovered in the home walls. Not bad, but I still had to pay for termite treatment and repairs before the new siding was placed.
Last year, I sold the property. I paid for a one page private appraisal by a licensed appraiser that would not be accepted by a mortgage company, but gave me good guidelines as to the value of the property in the current condition. I had been out of the real estate business long enough to not know current practices which were very different from my day. I did not have to share that appraisal with anyone. But it gave me comfort that the flipper was treating me fairly. In the OP case, sometimes having an appraisal in pocket, reveals some possible problems and/or can be a useful tool when trying to purchase a real estate property since most sellers prices are often above most realistic selling prices. A more recent land survey determined the fences on each side were encroaching on my property. I mistakenly assumed surveys were done before fences were placed. It turned out one neighbor not knowing it was a survey marker removed it when doing yard work. He thought his property was more that it really was. Murphy could be a neighbor who also thinks he owns more land than he truly does. Often such Murphys are not shy telling you their opinion of what they own. There can be legal issues if that goes on for a certain number of years. It is known as adverse possession. The North side was addressed by the removal of the encroaching fence which had been there long enough to cause legitimate legal problems if that neighbor wanted to push back. Fortunately, they were also selling and removed the fence to keep from tying up their sale. The south fence had been there prior to my purchase and was covered by some legal protections do to the length of time the fence had been in place. Fortunately the purchaser was a flipper and willing to accept the situation since it was disclosed prior to his offer. The lawyer drawing up the paperwork covered that in the deed. Whatever you do, get Title Insurance. Over the time of my ownership, the water system was taken over by a larger water system. By the time, I sold, no one in the current water system understood the original exterior water cutoff setup. They wanted me to get a new waterline with the current water cutoff in the main sidewalk. Again that was disclosed and the flipper adjusted his offer to cover that cost saving me the trouble. Unless, the OP is an experienced real estate purchaser, there are always Murphys that will come along later. A independent home inspection with a guarantee is strongly suggested. If a Realtor and/or reputable mortgage lender is not involved, a good lawyer with a real estate specialty can be well worth their fee. NOT A GENERAL LAW PRACTICING ATTORNEY.
Caveat: I guarantee you that I have not covered everything. I had over a decade of real estate experience some 20 years prior to the sale of my property but still was not qualified to sell my own property 40 years after that purchase. When I was a professional and even after, I saw lots of Murphys.
phisher4 said: I won't skip the inspection, of course...
But is there any reason to get an appraisal with no bank/mortgage involved?
How about a survey? If there are obvious lines and no trees or fences at the edge of the property to dispute with a neighbor, why would I need one?
Thanks Fatwalleters! I would agree that you can skip the appraisal & survey (especially in an area with well defined property lines). In a less dense/rural area, it would still make sense to get a survey.
ETA: One reason to get an appraisal is if there are not good comps and you want to use the appraisal to your advantage in negotiating price if it comes back lower than expected.
Survey supposed to be provided by the seller's attorney on their dime. I purchased two 'all cash' properties in the last 10 years and beside the loan process, not much to skip. I didn't do the appraisals and surveys were provided by the sellers. I did get inspections done on both properties to make sure the no hidden or structural issues.
When I bought our house, the appraisal cost $400, was paid by the seller, and saved me $8,000 on the purchase price. And I can use it to contest property insurance if the county appraises it too high.
The survey was $350, which I paid for. There weren't any obvious property line disputes. But I'm still glad I have it, I've used it from time to time to look up the size of the property or yard or perimeter of the house or elevation or whatever for various reasons.
Overall I spent $350, saved $8,000, and have an up-to-date appraisal and survey. I love to save money, but this seems like it's usually a case of "penny wise, pound foolish" if you choose to forego them. I mean, we may be talking about 0.1% or 0.2% of the purchase price?
If you don't get a survey, at least look at the described lot sizes and use a tape measure to make sure it's in the ball park. I bought a house with the usual chain link fence. Well turns out the fenced area was two lots and the neighbor owned the "empty" one that wasn't occupied by the house. Had to buy it from the neighbor.
bobbybore said: "What can I skip when buying a house in cash?" - Making money on borrowed money at a low rate where interest is tax deductible thereby reducing your cost of funds further. Buying the house in cash doesn't preclude a cash out refi
rufflesinc said: bobbybore said: "What can I skip when buying a house in cash?" - Making money on borrowed money at a low rate where interest is tax deductible thereby reducing your cost of funds further. Buying the house in cash doesn't preclude a cash out refi Cash out Refis are generally expensive though (relative to regular mortgage)
This all depends. In a small town for a basic average house I can see very few problems. But a big nice house in a large town that hasn't Been sold for awhile there can be legal and neighborhood issues....
> with no mortgage you can get an ACV homeowner's insurance policy, as opposed to replacement. typically much cheaper.
> if you know your shit, you can do the inspection when you view the property. helps to have an engineering degree and a lot of experience. not really recommended otherwise.
> most importantly - you can skip TO THE FRONT OF THE OFFER PILE. cash offers are worth more, period. how much more? depends. i would say generally speaking, inversely to the condition of the property. house is nice? cash discount low because the buyer pool is large. house is rough as hell? large cash discount because seller probably doesn't really know the condition, and buyer pool is small.
I know this can be a minority opinion, but I would never skip a good lawyer on retainer. A good lawyer up front doesn't cost much, but the price goes up fast when looking for one after an issue has come up. Of course, a good lawyer up front will help you avoid many of the issues that can become expensive afterwards.
solarUS said: > most importantly - you can skip TO THE FRONT OF THE OFFER PILE. cash offers are worth more, period. how much more? depends. i would say generally speaking, inversely to the condition of the property. house is nice? cash discount low because the buyer pool is large. house is rough as hell? large cash discount because seller probably doesn't really know the condition, and buyer pool is small. If the house is "rough as hell" you wouldn't be able to get a mortgage on it . Not a plain vanilla conventional one anyways
rufflesinc said: solarUS said: > most importantly - you can skip TO THE FRONT OF THE OFFER PILE. cash offers are worth more, period. how much more? depends. i would say generally speaking, inversely to the condition of the property. house is nice? cash discount low because the buyer pool is large. house is rough as hell? large cash discount because seller probably doesn't really know the condition, and buyer pool is small. If the house is "rough as hell" you wouldn't be able to get a mortgage on it . Not a plain vanilla conventional one anyways yeah, that's my point. smaller buyer pool.
solarUS said: rufflesinc said: solarUS said: > most importantly - you can skip TO THE FRONT OF THE OFFER PILE. cash offers are worth more, period. how much more? depends. i would say generally speaking, inversely to the condition of the property. house is nice? cash discount low because the buyer pool is large. house is rough as hell? large cash discount because seller probably doesn't really know the condition, and buyer pool is small. If the house is "rough as hell" you wouldn't be able to get a mortgage on it . Not a plain vanilla conventional one anyways yeah, that's my point. smaller buyer pool. vacuously true
I would think an appraisal has no value in renegotiating price if you've made a cash offer. The reason it can be used when there's financing is that your offer surely includes a contingency based on obtaining reasonable financing. Lenders require the appraisal to make sure the loan amount fits their LTV criteria, and if the appraisal comes up with a much lower value than your purchase price, they can decline the loan. So you go to the seller with this appraisal and explain that the financing will fall through unless the price is renegotiated. He's free to tell you to pound sand, but that could mean a big delay in finding another buyer, plus a risk that he's going to get lower offers or a similar appraisal problem with the next buyer.
And in my area, appraisals are stupidly expensive lately, there's no way I'd opt for one.
As I indicated previously local customs vary by area and terms negotiated. Example: when I was in the business, we wrote the contract to give the seller a set $$ purchase amount which included prorated taxes and insurance. No money was added for proration. Even so, take steps to insure the insurance fits your situation. A family member took the previous owner's insurance as part of the sale only to learn it was inadequate and improper for the insurance protection needs of the family member. Paying for the appraisal, survey and various other expenses is / should be spelled out in the contract as custom varies in different areas.
Definitely get both Title Insurance and separately Home Owner's Insurance HO3 or better.
Old Joke - too much truth in it Assume - break it into syllables = makes an ass of you and me.
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