2 mistakes commonly made by cash home buyers in Georgia

On Behalf of | Apr 28, 2023 | Real Estate Closings

First-time home buyers with bad credit but good jobs, aspiring real estate investors and those hoping to buy a vacation home often pursue cash purchases, including properties in need of a little bit of rehabilitation. A cash purchase eliminates the complications of securing financing and can also possibly eliminate some of the costs involved with closing.

However, eagerness to keep expenses as low as possible may push cash buyers into expensive and preventable mistakes that could put them at a financial disadvantage and/or endanger their investment. These are two of the most common mistakes that cash buyers may make during a real property purchase.

1. They waive the inspection

Cash buyers may walk through a property and believe they have an idea of what repairs it will require and how much it will cost to get the property back into ideal condition. Unfortunately, especially if buyers have no professional real estate background, they could very easily overlook problems that will compromise the value of the property.

Latent defects in the HVAC system, the wiring or the foundation could be very difficult for those without special training and equipment to identify. Without a lender to require an inspection, cash buyers may end up making a mistake that leaves them responsible for making major repairs to a property that is not worth as much as they have invested in it.

2. They forgo title insurance

People who finance a real estate purchase typically have to buy two title policies. There is a policy that protects the lender and also one that covers the buyer if there is a title issue in the future. Unfortunately, those buying a home on their own have no obligation to obtain title insurance and may choose to forgo coverage. Especially if the property they want to buy transferred owners in a divorce or through probate court, there may be elevated risk of a title claim that could deprive the buyer of every cent they have invested in the property if they don’t have title insurance protecting them.

Buyers without a lender imposing protective requirements could also make mistakes when making an offer, such as failing to negotiate a post-closing occupancy agreement with the seller or not including contingencies to give them a way to cancel a closing, if necessary. Thankfully, having proper support and guidance during real estate transactions can help buyers avoid common pitfalls.