PAYING CASH FOR DC REAL ESTATE

What sellers and listing agents expect from a cash homebuyer in Washington DC.

Earnest Money Deposit
Home sellers require all DC home buyers to include an Earnest Money Deposit with their offer. This sum if forfeited by the buyer and is awarded to the seller as damages if the buyer defaults on the contract unless contract terms dictate otherwise. The EMD amount is typically 10% or more of the purchase price, depending on the circumstances. 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.
 
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 of the property at time of offer. This letter should be on the banking institution’s letterhead and signed by an officer of the institution (generally a Vice President or General Manager). The letter should not include statements of accounts or account numbers and other hyper-personal information, but can include a balance if desired.

Financial Information Statement

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

Lender's Pre-Approval Letter

Some sellers and listing agents may request a pre-approval from a local, reputable 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 buyers financing their purchase in that they can close very quickly, often in as little as three to five days from date of contract, their offers do not carry appraisal contingencies, and risk of financing falling out is eliminated. For this reason, cash buyers have the upper hand in a multiple offer scenario. Cash buyers also pay lower closing costs and have more flexibility on offer price.

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