PAYING CASH FOR DC REAL ESTATE

What Sellers Expect From a Cash Home Buyer in Washington DC

Earnest Money Deposit

Home sellers expect buyers paying cash for DC real estate to include an Earnest Money Deposit with their contract. This is a sum of money that goes to the seller if the buyer defaults on the contract. The sum is typically the same amount as an EMD deposit from a buyer with financing; generally 5% to 10% of the purchase price. This is true even if the transaction is scheduled to close in less than a week from the contract date. The Earnest Money Deposit is held by the title company of the buyer’s choice in an escrow account. It will count towards the total purchase price of the property. If the buyer defaults, the contract terms, unless amended a the time of purchase by both buyer and seller, dictate that the deposit goes to the seller as damages.

Funds Verification Letter

 The seller will want a Funds Verification Letter from the buyer’s banking institution, confirming that available funds exist to cover the entire purchase price at time of contract. This letter should be on the banking institution’s letterhead and signed by an officer of the institution (generally a Vice President – General Manager). The letter should not include statements of accounts or account numbers and other hyper-personal information.

Financial Information Statement

Sellers are likely to require a Buyer’s Financial Information Statement in addition to a Funds Verification Letter. This is a standard GCAAR form (updated in 2017) which makes basic financial representations for assets, debts, savings, etc.

Pre-Approval Letter

Some sellers and listing agents may request a pre-approval from a local, recognizable lender in addition to a Financial Information Statement and a Funds Verification Letter. They see this as a third-party verification of your self-substantiated representations.

Perks For Cash Buyers in Washington DC

Cash buyers have the advantage over financing buyers in that they can close quickly, often in as little as three to five days from date of contract, their offers do not carry the risk of financing falling out, appraisal values, or longer escrow periods. For this reason, cash buyers have the upper hand in a multiple offer scenario. Cash buyers pay lower closing costs and have more flexibility on offer price.
DC real estate contract boilerplate changes frequently. The information and forms on this page are considered accurate but not guaranteed. Be sure to consult your real estate agent for the most up-to-date information.

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