Paying cash for a home sounds simple. You skip the mortgage, avoid the bank paperwork, and can often close faster. But here’s the part many overlook: the closing must be done properly. Just because you’re not using a lender doesn’t mean you can skip the legal and financial structure of the transaction. In fact, paying cash can come with its own set of risks if you don’t have the right people involved—starting with the settlement agent.
If you’re buying a home in Iowa with cash, here’s what the settlement agent does and why their role is just as important—maybe even more important—than when financing with a mortgage.
Making Sure All the Money Goes Where It Should
Even when you pay cash, the money doesn’t just go from your checking account to the seller’s. (PLEASE do not simply write a check to the owner of the property you’re purchasing.) Instead, all funds flow through the settlement agent’s trust account—typically managed by a closing attorney. This process creates a clear, verifiable paper trail for every dollar involved in the transaction.
The settlement agent makes sure every invoice, fee, and tax connected to the transaction is documented and agreed upon by both parties. That includes things like:
Once these expenses are confirmed, the settlement agent distributes the funds accordingly—out of their trust account—to each party or vendor. That way, if anyone ever questions whether a payment was made or a tax was paid, there’s a complete, signed paper trail and a settlement statement to back it up. It’s all documented, accounted for, and tied to the attorney’s trust account for transparency and protection.
Avoiding Expensive Mistakes (Like Tax Fraud)
It’s common for cash buyers to think they can just write a check to the seller and call it a day. However, skipping formal closing steps in Iowa can cause real, sometimes legal, problems.
For example, Iowa charges a transfer tax—called a revenue stamp—on nearly every real estate transaction. The tax has to be paid to the county recorder’s office at closing. If a buyer doesn’t know this and pays the seller directly, the tax goes unpaid. That’s not just a loose end—it could be considered tax fraud by the Iowa Department of Revenue.
A settlement agent knows what needs to happen and when. They’ll ensure the proper taxes are paid, documents are recorded correctly, and the deal is closed according to state and county requirements. If you skip that and mess it up, it often costs more to fix the issue than it would have cost to do it right from the start.
Buying a home—cash or not—is still a legal transaction that must be handled carefully. A good settlement agent ensures that all the money is tracked, every document is signed, every tax is paid, and there’s no confusion down the road. That kind of peace of mind is worth it.
Closing on a home in Iowa? Don’t go it alone. The team at Danilson Law can serve as your settlement agent and guide you through a clean, secure closing—whether you’re paying cash or using a mortgage. Let’s make sure your money and your property are protected.