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How to Sell Your Home, Diary, Part 3: All Cash Buyers ~ Do You Really Care?

IMG_1162Since I listed my house for sale, without a broker, I have been inundated with inquiries from people wanting to know if I was willing to discount the sale price for an “all cash buyer.”  These inquiries have all been via email, without a phone number and they all go something like this:

“I represent foreign investors who are prepared to make you an all cash offer.  We are ready to close within 10 days.  This is a real offer, believe me.  I have been at this for many years.  Are you willing to reduce the sale price? If so, please get back to me so I can crunch the numbers.”

To wit, I have replied:

“Sure, make an offer and provide proof of funds.”

Of course, I never get a response.IMG_1143

I get it.  Some “bottom dweller” sees that I have listed the house for sale without a broker and figures that I am either stupid or desperate, because I am too cheap to pay a broker a commission. They must think that I am some inexperienced fool, just ripe to be castrated by a clever real estate person who feeds on the innocent. There a few problems with this logic.

  1. Although I may not be too bright, my wife and I are not desperate;
  2. I am willing to pay a cooperating broker a 2.5% commission upon the delivery of a buyer who is ready, willing and able to purchase the house upon terms acceptable to my wife. Additionally, should I actually get an offer from a buyer not represented by a broker, I will probably offer them $5,000 to pay as a flat fee for a broker to represent them in the sale; and
  3. I’ve already been fixed and I don’t want any other children.
IMG_1159So what’s with all of this “cash” offer stuff and does it really mean anything?

I’ve been told that the sale of homes in our area, was very robust, last spring and summer.  This led to a nearly 25% increase in home prices, year over year. I have also been told that part of the price increases were as a result of foreign buyers plopping down cash.  With this understanding, I am perfectly open to the possibility that there are cash buyers out there who might be interested in buying my home.

With this being said, how much of an advantage is it to sell your home to an “all cash buyer”?

For one thing, as a seller, you don’t have to deal with a loan contingency or the sale of the buyers existing home.  That is a big deal.  Once you have signed escrow papers, you are holding your breath to get past the contingencies. As a practical matter, the contingencies are almost a carte blanche for the buyer to back out of the deal.  Delay in the sale of your home is generally, not to your advantage. A loan or sale of existing home contingencies are likely the greatest reasons for the delay in closing or the sale falling out of escrow.

Without those contingencies, other contingencies, such as title, will usually take, only days for approval. Homeowner’s association approval and dues as well as existing loan payoffs and taxes can also be done in short order. This is great if you want to close quickly, say in about 10 days.

But how much of a discount is an all cash offer worth? If I could move in 10 days, I suppose it would be worth something to me. The fact of the matter is I couldn’t move in 10 days and would probably require a 30 day lease-back after the close of escrow since I do not want to commit to new living arrangements unless and until I knew the house sold. To some people, an all cash offer may be worth quite a bit.

An all cash offer also has some complications. You need to be able to verify that the buyer has the available funds to close escrow and is not counting on another deal to close or a loan from some long lost uncle who lives halfway around the world.  For my part, I would want written verification from a known, reputable bank of the amount of funds in the buyers account, coupled with the ability to go to the bank and verify the funds in person.

With an all cash offer, I would also want further assurances that the buyer will complete the sale, including a substantial deposit, a portion of which should be non-refundable.

OK, call me a cynic.  I can’t help myself.  I’ve been a broker for over 30 years and a real estate lawyer for nearly 40 years.  Maybe the people who have contacted me are experienced enough to tell from my cryptic message, “Sure, make an offer and provide proof of funds,” to lay off and look for an easier target.

To follow my earlier “How to sell your home, Diary posts, click below:

Part 1, Thinking of Downsizing, the Baby Boomers New Dream

Part 2, Deciding on the Listing Price

Oh, by the way, if you are interested in purchasing a great, large and our former dream home, send me an email at howard@creradio.com.

Our 3,600+ square feet home sits on a beautiful, lush 8,000+ square foot lot that is fully landscaped with a pool size backyard. There is a three-car, full garage with additional driveway and street parking for about 2-3 more cars. A portion of the garage is built out as a home office/studio with full electrical, wired Internet and enough telephone wiring for 12 telephone lines, perfect for the home/office entrepreneur.
This is a 6 bedroom or 5 bedroom and convertible den, 4.5 bath, two story house.  This is a large house with tons of storage space and bedrooms.
The front of the home is dominated by a large and wide driveway and rose covered landscaping with automatic sprinklers, throughout the front and back yard.
The home was built in 1996, and was used as the model home. We are the original owners and still have the furniture used in the model. It also has dual zone, central air-conditioning for energy efficiency.
As you walk through the double-stained glass doors and the marble entryway and foyer, you are greeted by a baby grand piano and the very large, open, and airy living room and dining room. If you like natural light, these are the rooms for you. One of the bedrooms is located downstairs, with its own full bath that is currently being used as an office but is perfect for the in-laws. The kitchen is huge with full, black granite tile throughout and an island stove top and eating area. When we bought the house, my wife promised to cook when she saw the kitchen. There are 52 draws and cabinets in the kitchen.
The upstairs has an oversized master bedroom, two bedrooms sharing a Jack & Jill bathroom, another oversized bedroom with its own bathroom and an additional, large den that can be converted to another bedroom. The master bedroom has two oversized walk-in closets and built in headboard and cabinets, double sink and separate oversized bathtub and shower.
Dove Canyon is an exclusive community that surrounds the world famous Jack Nicklaus designed Dove Canyon Country Club and Golf Course. As a homeowner, you are entitled to become a social or golf member of the club. It’s really nice living down the street from the golf course. There is also a large community swimming pool and basketball and tennis courts.
The home is within the Capistrano Unified School District, one of the best school districts in California, wining many honors.
Dove Canyon is far enough away from the hustle and bustle of traffic yet within a 15 minute drive of the 405 Freeway and most accessible to the 133 tollroad.

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