In addition to IRS reporting requirements, there are no laws prohibiting a cash real estate transaction, and if you have a seller willing to receive physical cash, it can be a quick way to buy. However, as a buyer, paying with physical cash is probably more problematic than it's actually worth. Yes, technically, you can take a briefcase full of cash to the closing table and use it to buy a house. There are no laws prohibiting a physical cash real estate transaction, just a few obstacles.
The inconvenience of paying cash occurs when the purchase makes your money too tight. If you buy cash, you'll immobilize all that money in a single purchase. This can reduce the cash you have on hand for things like repairs or emergency funding. If you have a reasonable suspicion that a sale is being financed for illegal purposes, you can file a suspicious activity report with the Financial Crimes Compliance Network (FinCEN) of the U.S.
Treasury. So what is the bottom line of bringing real cash to a close when you buy a home? In general, it's not a good idea. All that said, buying a home with cash can be a smart financial and personal decision for a number of reasons. Just because you don't have a monthly mortgage payment doesn't mean you won't pay anything for your home.
The form to consider is the Suspicious Activity Report, but it will not be filed unless the cashier thinks he has dangerous intentions. In the event that the housing market falls or the value of your home declines, you won't end up with a mortgage that has a higher value than your home. If you really want the property and there is a lot of competition in the market and for that house, you can do it in advance instead of waiting to be asked for it. The seller may not feel comfortable selling their home in a situation that seems bleak, out of consideration for their neighbors or neighborhood.
You can pay for a house with cash, but that doesn't mean that the advantages of paying for a house with cash outweigh the disadvantages. Homes are fairly illiquid assets, so if you spend a large proportion of your liquid assets on the house, it's not easy to find cash for other things in your life. An experienced real estate agent can also help you create more attractive offers that are accepted, shortening your housing search process. Paying for a home in cash means that the buyer will transfer the money or issue a cashier's check on the closing date instead of resorting to a mortgage company.
I was watching an episode of HGTV's House Hunters International, and in many countries you have to carry a suitcase full of money.
