- FULL PRICE!
- ALL CASH!
- NO LOAN CONTINGENCY!
- NOT CONTINGENT UPON SATISFACTORY APPRAISAL!
- TO CLOSE WITHIN 15 DAYS!
These days, an offer with terms as above is music to most REALTORS ears.
After all, it addresses pretty much ALL of the issues that could possibly arise between binding agreement and closing . . . or DOES IT?
On the surface, we’ve checked all of the boxes.
No worries about a Loan failing to be approved because of some nit-picking underwriter, new lending guidelines, Buyer’s loss of job, or any of the other myriad issues that could kill or delay the closing . . . CHECK!
No worries about the oft encountered dilemma in just about any appreciating Real Estate Market . . . an appraiser’s failure to see the value and appraising the house LOW . . . sometimes because the appraiser is conservative, others because the Mortgage Company is imposing “Appraisal Rules” that restrict the appraisers from using REAL comparable sales, or those pesky times when the appraiser hails from a land far far away away from the subject property and simply doesn’t know and/or understand the “Local Market.” . . . CHECK!
No worries about a home inspector wrecking the deal with an alarmist 74 item “Needs attention” or “Safety Hazard” list of things WRONG with the house thereby scaring the Buyer silly and requiring the Seller to perform a veritable renovation of the house prior to closing . . . and subsequently killing or delaying the closing. . . . CHECK!
The 15 day closing is nothing short of WONDERFUL. This gives less time for “Weird Stuff” to happen – Like Buyer’s remorse, or divorce, or death, or destruction of the house by Natural Disaster (I’ve seen all of those things happen during a transaction) . . . and EVERYONE gets paid FAST . . . and Buyer gets to move in FAST . . . CHECK!
For all of the above reasons, REALTORS and Home Sellers LOVE deals like this, and in a low inventory, highly competitive market, these deals often WIN in the “Multiple Offer Scenarios” because they are so CLEAN.
Sometimes, these deals aren’t all what they seem to be . . .
This is the Siren Call of “Too good to be true” . . . Times when it seems too good to be true are times when we should proceed with CAUTION . . . because they may be.
Some things to consider before getting too excited about these offers:
(I have seen ALL of these in recent transaction)
- How will you “Prequalify” the Buyer?
- What if the Buyer really DOESN’T have the cash?
- With such a short time, Seller’s gotta move out QUICKLY . . . What happens if Seller scrambles to move out and the deal fails to close?
- If you give Buyer early possession, what happens if the deal doesn’t close?
- How do you know the “Proof of funds” is real?
- Are you sure the Buyer is who he says he is?
- If it’s your listing, how certain are you that the Buyer’s agent really KNOWS the Buyer?
- Is there ample Earnest Money, and did the check clear the bank?
- Could this be a “Bait and Switch” offer whereby Buyer lets the deal unfold and then holds everyone hostage by making last minute demands for repairs and/os Seller concessions.
I hate to give “All Cash” offers a bad name, but I want to remind everyone that at the closing table ALL offers are “All Cash” to the seller 🙂
Recently, I have encountered the following blips with All Cash Offers>
- Buyers who aren’t who they say they are
- Buyers who were convicted Felons (Fraud and myriad other crimes)
- Buyers perpetrating “Money Laundering” schemes using the Purchase agreement as a tool to lure a bank into accepting unusually large cash deposits.
- Buyers using “Homemade” checks for earnest and “Homemade” Proof of funds letters and “”Homemade” wiring transfer confirmations
- Schemes in which Buyer gains early possession and then delays the closing for as long as possible and “squats” in the property for as long as possible.
- I’m sure there’s more . . .
Many of the perpetrators of these schemes are BOLD and unafraid of legal ramifications because they’ve already spent time in the pokey. They know the odds of anyone following through with filing charges are slim . . . and even if they were convicted of felonious fraud, they would enjoy a couple of years of “Retreat” in the local correctional facility.
This is egregious stuff . . . and I have a bit of advice that is simple and will suss out 98% of these bad people. These folks will only prey on folks who are easy targets.
Simply change your policy when working with people you don’t know well.
On the very front end of the relationship, meet with them and REQUIRE a copy of their Drivers License to confirm they are who they say they are and they live where they say they live . . . and then be a PI (Private Investigator) and use Google and other resources to confirm where they work, what they’re saying on Facebook etc.
If they are very bad, they’ll refuse to provide you positive ID . . . or they’ll give you fake ID which you can easily confirm or deny.
Don’t let the Siren Call of “All Cash, FAST Closing” lure you into this trap of complacency.
Now . . . Please tell us YOUR stories, so we can all learn more about how Bad people are taking advantage of this process of Buying and/or Selling houses.
We MUST defend the validity of this process vigorously.
Be careful out there . . . TRUST but VERIFY!