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Should a Home Paid for With Cash Use a Financing Addendum in the Seattle area?

If a buyer will be purchasing a home with cash, should a financing addendum be used, indicating that the price will be paid-in-full with cash?

Answer:
It’s not necessary. If a purchaser will be closing on the home with cash, then the purchase is not contingent on the buyer obtaining financing. Hence, there is no need to use the financing addendum. However, the absence of the financing addendum does not necessarily mean that the buyer IS paying cash and likewise – it also does not mean that buyer is not obtaining a loan. It simply means that buyer is not making the offer contingent on obtaining financing. If the buyer cannot provide the cash necessary to purchase the property on or before closing, the buyer will be in breach of the agreement and stands to lose any earnest money.

The financing addendum does include a low appraisal clause…if the appraisal is less than the purchase price, then the buyer has the right to terminate the contract and retain their earnest money. So that may be a consideration to include if you are paying cash on your purchase.

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