Cash Offer. Means C A S H...

There has been a large number of cash offers being made over the last few years. I have definitely felt an uptick in my business and other Realtors® have expressed a similar vibe as well. But buyers making cash offers need to be very clear about what a CASH offer is. I ask my buyers that want to offer cash on a house, right up front. Do you have the cash on hand right now? That is, is the cash in the bank and accessible immediately. That my friends is the DEFINITION of cash. It is immediately accessible money. Some buyers are planning on drawing an equity line, or taking a loan on another property, or selling another asset. This is not cash until those transactions are complete.

A buyer making a cash offer that does not have the cash already liquid is in jeopardy of default should the source of the "cash" be delayed or for some reason made unavailable. Even more dangerous is the fact that a cash offer made without liquid cash on hand could be litigated by the seller as civil fraud should the deal fall apart. Cash is C A S H, not "I'm taking a line of credit," or "my uncle is lending me the cash." Buyers need to disclose to the seller the source of the cash if it is not already liquid and sitting in the bank. It is fine and well to make an all cash offer predicated on the arrival of cash from another transaction, be it a sale of another property, or loan, or gift, whatever the case is; but when that cash is on the way rather than in the bank, disclose, disclose, disclose.

Buyers in a tight market are often trying to make their offer stand out in front of other offers, but they must be cautious not to put themselves in legal trouble when making a soft cash offer. Buyers that want to play with the "big fish" in the hard cash arena, need to take the loan, sell the asset, or grab the gift, etc. BEFORE making the offer.    

Closing Systems Exist to Protect Us

Sometimes I encounter people that are frustrated with the cost and "inconvenience" of closing a real estate transaction. I get it, it is truly a pain in the hind quarters. But there are some people running about who are seeking to cheat others through fraud. We have in place a series of procedures, some of which are mandated by either the Feds or State governments, others just regionally customary.  

Sometimes sellers and even buyers will try to 'outwit' the system and enter into an agreement to purchase or sell a property outside of these traditional closing methods. For what? To save a few thousand dollars on title insurance, and escrow fees? To save a little time? 

I would strongly caution that any seller willing to participate in such a sidestep is very likely trying to cheat the other party. Without following the proper procedures in handling the close of a real estate transaction it is rather easy for a bad guy to sell his property to more than one buyer. He that records first is going to gain title and those that do not record first will be forced to sue the seller for fraud. Good luck with that.

These systems of closing involve disinterested third parties trained in the handling of escrow and title services. They are expensive, but they are effective. Even a for sale by owner transaction should by all means utilize the proper closing methods. A for sale by owner would be the likely type of transaction that a would be fraudster would utilize to perpetrate the misdeed.

Closing consists of among other details the following:

• Third party escrow holds all monies and documents until all procedures and contractual obligations are met. No one gets paid till the deal is properly done. 
• Title policies insure that title is marketable and free of encumbrances.
• Escrow prepares statements in accordance with the law and with no favor towards either party.
• Escrow will record properly the sale upon the full execution of the contract to purchase.

These are important details and when handled by professionals the opportunity for fraud is severely curtailed.

I am truly amazed that people fearful of a $5,000 stock market transaction, will enter into a shady real estate deal, risking hundreds of thousands of dollars. Don't go there my friends. utilize the services of local pros like Realtors®, escrow officers, title insurance companies and/or your attorney. Real estate is a wonderful investment, a necessary commodity, and an opportunity for fraudsters to do harm. By all means buy real estate, just go in with your eyes open.