Only 8% of buyers paid all out cash for their home purchase according to the 2009 NAR Profile of Buyers and Sellers. This statistic represents cash buyers who successfully closed on their purchase…which suggests that about 92% of buyers require some amount of mortgage financing.
This begs the question:
How many buyers make cash offers that Sellers accept and fail to close?
It seldom happens but you don’t want it happening to you.
Most sellers buy another home when they sell; often coordinate the closing dates for the home sold with the one purchased and need the equity out of their sale to complete the purchase.
Every once in a while a seller is caught in such a tight spot.
Just before closing it’s discovered that the seller’s cash buyer doesn’t have the funds to complete the purchase; now the seller can’t close on the home he bought, putting him in legal jeopardy with the 2nd seller. It’s a mess.
So how can sellers better protect themselves from a potentially bogus cash offer? Here are 2 possibilities:
- Negotiate a large deposit. If the buyer is sincere, he will understand. After all, most buyers make a cash offer to get a better deal; so it’s a fair trade--a better deal for a large deposit that the buyer risks losing.
- Take extra precaution, depending on your tolerance for risk that the buyer may walk. Make the offer conditional on the buyer providing verification from a bank, satisfactory to the seller, that the buyer has the money in place to close on the purchase without the need for a bank appraisal.
If the buyer takes exception to this, then ask yourself, “What’s he hiding?”
Let’s face it. As a buyer rightfully expects full disclosure, so should a seller. Caveat Emptor (let the buyer beware) applies to the purchase of property. So should Caveat Venditor (let the seller beware), as sellers should also take preventative measures from being deceived in a transaction.
Buying and selling real estate is not only significant financially; it can also be emotional charged.
Seeking the aid and advice of professional real estate counseling can be worth its weight in gold. It can save you from:
- A lot of stress, and
- Potential financial loss.