If you’ve read my blog post “Use Your Equity to Get Into a Bigger House and Skip the Marketing & Sales Process” on the example family of Mark and Susan Miller and how they quickly converted the equity they had built in their older house into cash for a down payment on a newer, bigger and better house, you know that Mark and Susan need to be ready to move to their new home when a cash buyer first comes around to assess an offer! The deal may well close in just a few days or a couple of weeks.
If you are doing the same as our hypothetical Millers, you’ll be ready to move on to your next home within days of first presenting your old home to a cash buyer. You’ll have arranged the financing for the new house and the moving date. You have only to close out on the old one to complete the deal.
When you accept an offer from a cash buyer – which you plan to do quickly (that’s the whole point of working with a cash buyer) – you should already have these steps underway or completed:
Contact the mortgage lender for the house you are selling:
- Tell them the date by which you hope to sell and find out how that will affect what you pay at closing.
- Find out the payoff amount. Remember it is date-sensitive.
- Put the mortgage lender in touch with the title company handling the final close as soon as possible, so everything can be ready for the old mortgage to settle from the sales proceeds.
You will need to find the following in your financial records:
- Your last property tax bill so you can be prepared to settle the balance due at closing. Your mortgage lender has been maintaining an escrow and paying the property taxes. But you have to settle the current balance at closing. Eventually, the escrow balance will come back to you.
- Your original purchase contract won’t be needed to close, but you’ll need it to calculate capital gains for your personal taxes for the year.
Open all lines of communication and make phone calls to keep everyone in the loop. A fast process can hit a bump when one person doesn’t get the information and doesn’t have their part ready – the lender, the buyer, the title company, etc. It’s your closing and your money, so don’t count completely on others in case someone slips up.
If you are working with a cash buyer or wholesaler, expect to close fast! Do your information-gathering up front? Keep it moving, and if you find a cash offer you like, you’ll soon have the cash in your pocket to move on with your life!
