“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.
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.
- Although I may not be too bright, my wife and I are not desperate;
- 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
- I’ve already been fixed and I don’t want any other children.
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:
Oh, by the way, if you are interested in purchasing a great, large and our former dream home, send me an email at email@example.com.