Black and Buono Blog

...by Kiley Black

Though most buyers don't buy a home with all cash, anyone considering such a move may be wondering how to do it. Because all-cash buyers sidestep the time-consuming loan qualification process, the transaction can close more quickly than if financing is involved.

One advantage of buying a home with cash is to avoid paying mortgage interest. But, buyers also save money that would be spent on loan origination fees, the bank required appraisal, some of the closing costs and various other charges imposed by the lender.

At the same time, there are some potential pitfalls to an all cash transaction that buyers should consider. Buyers who want to use the home as their primary residence lose out on the tax advantages available to homeowners with conventional loans.

Often cash buyers are purchasing short sales or foreclosed homes.  These homes can and will often have title issues or leins which must be addressed by a real estate attorney. It is imperative that as the home buyer you are completely protected.

If the cash buyer is also an investor who intends to resell the property, Black and Buono has the expertise to make certain any title issues are resolved quickly so that the property can be sold within the investors intended time frame. 

If you can afford to pay cash but are concerned about price appreciation, you may be better off obtaining some financing. Also, look at other investments that are paying off and determine if spending cash on a home is your best investment option.

The percent of cash home sale purchases in Middlesex County, Norfolk County and Worcester County have been steadily increasing.  The Law Office of Black and Buono has the experience and the knowledge to identify the unique issues facing the cash buyer.  

...by Kiley Black

A short sale is when the lender agrees to accept less than they are owed for an outstanding mortgage loan. A bank would much rather agree to a Short Sale than foreclose on a home. Homeowners that are in jeopardy of foreclosure may attempt to negotiate a short sale in order to preserve their credit and limit their future financial responsibilities. If you are a buyer, and you have time and patience, buying a short sale home can be a bargain of sorts.

Massachusetts short sales are not your typical transaction and you need patience, understanding of the process, and you need to consult with qualified professionals. There are additional legal and tax issues that apply to a short sale which can change the timeline for the negotiations and closing date.

The Massachusetts foreclosure process can take over 90 days and is an expensive legal process. The bankruptcy court allows sales to be overturned if the amount of the sale was less than the market value of the property. So lenders in Massachusetts go out of their way to notify prospective buyers and real estate agents of an upcoming sale.

Negotiating a successful transaction requires an accepted contract with the Seller subject to lender approval. To prevent foreclosure, the Seller must have an offer that meets lender guidelines for approval, but there is no guarantee of lender approval. Follow these guidelines to improve your chances of a buying and closing on a short sale listing:

You must be a Qualified Buyer
You must show that you qualify to purchase the property. The lender will not approve a short sale with a home buyer unless they have reasonable assurances that you have funding. Obtain credit approval or, if you are a cash buyer, provide proof of funds through bank statements or letters of credit. The pre-approval must not contain restrictive conditions such as subject to the sale of an existing property.

The Listing
Sellers selling short usually have a limited amount of time to obtain a qualified buyer in order to avoid foreclosure. If they have not started the process with their lender and provided the necessary paperwork, there may not be enough time to affect a sale.

Do not pursue a property that is not short sale ready as you may be locked in for a long time and may not be able to buy other properties that come on the market.

Negotiating the Offer
The first step is to have the Seller accept your offer and in most cases you will be competing with multiple buyers.  Buyer qualifications, selling price and terms will be the deciding factors for seller acceptance. Offers with fewer contingencies are usually preferred by sellers and lenders.

Home Inspection – be prepared to invest the time and money in the home inspection prior to lender approval. A seller risks losing the buyer on the inspection issues and will not have time to sell the property to another buyer so they can’t wait for lender approval.

Closing Date Flexibility - lenders often require a quick closing once they approve the short sale. To take advantage of your contract you may be required to meet the lenders conditions. Also, be prepared to lock your interest rate thru closing so that your mortgage commitment will be valid.

Subsequent offers in Massachusetts, real estate law requires that all offers be submitted to the Seller. A contract with a higher sales price may have a better chance at being approved by the lender and may be a financial advantage to the Seller. The lender will give the Seller direction as to submitting additional offers.

Lenders have large inventories of distressed property so you must have realistic expectations of the time-frame for approval. It may take as long as 180 days and during this timeframe, property values can change.

By...Kiley Black

Cash home sales are increasing dramatically throughout Massachusetts.  This is the result of many factors, mainly the tightening of lending guidelines for owner-occupants, and the lessening of available financing for investors.  Even if they qualify, many investors are not interested in conventional financing because the process is too long. As a result, the “steals and good deals” may be lost while waiting for loan approval.  

Within the last twelve months, almost 18% percent of home purchases in Middlesex County, Norfolk County and Worcester County were cash sales.  The Law Office of Black and Buono has the experience and the knowledge to identify the unique issues facing the cash buyer.  

Frequently the homes cash buyers are purchasing are short sales or foreclosed properties.  These properties often have title issues which must be addressed by a real estate law firm. It is imperative that we ensure the home buyer is completely protected. If the cash buyer is also an investor who intends to resell the property, Black and Buono has the expertise to make certain any title issues are resolved quickly so that the property can be sold within the investors intended time frame.

If you’re a homebuyer purchasing with cash or a realtor working with a cash buyer, contact Black and Buono today. We can help you through the unique issues encountered when buying a home or investment property for cash.