Seller accepting the all cash offer is looking for secure payment

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Q: I am planning to accept an offer to sell my house for cash. Is a certified bank check really the safest means of payment other than a bag full of cash?

A: We chuckled at the thought of someone entering a store with a bag full of money. Maybe they are paying for their million dollar property alone?

Seriously, you asked an interesting question, and our answer may surprise you. Let’s start by explaining what makes an all-in-cash offer.

Sellers want to know that when they sign a contract with a buyer, the buyer completes the purchase of the home. Buyers use the phrase “full cash offer” to indicate that they do not need to borrow money from a lender to complete a purchase. (This does not mean the customer comes with a bag of cash or even a bank check.)

Most borrowers go to a bank, mortgage banker or mortgage broker, apply for a loan to cover a portion of the purchase price, and then pay the remainder (minus a good faith deposit) due via bank transfer. Usually the lender provides most of the funds for the home purchase.

But since most buyers use lender financing, most sales contracts include contingency financing. This contingency dictates that if the buyer is unable to obtain funding to buy the home by a certain date, the buyer can cancel the transaction and the seller will return all the money the buyer put in.

Well, right now we’re in one of the most popular seller markets we’ve seen in over 25 years. There are many more buyers than real estate objects for sale. Most homes are sold in a bidding war, and buyers are doing everything in their power to make their offerings stand out from the crowd. Thus, they tell the sellers that they will buy with cash. This means that the buyer is willing to withdraw from the transaction, including any funds deposited in a bona fide deposit, if the transaction does not go through for any reason, for example, he cannot obtain financing.

In some real estate markets, listing agents ask the buyer to provide proof of funds that they can close when purchasing in cash that buyers have in the bank. These agents are trying to make sure that the buyers actually close the house and have the money to do so.

But you have to remember that most buyers don’t have much money to close without a lender. At the end of the day, what really matters is how much of the deposit the buyer puts in as a sign of good faith. If a buyer makes an offer entirely for cash, but only puts in $ 1,000 in advance, the buyer is not taking much risk – and the seller knows it.

But if a buyer puts in $ 25,000 or $ 100,000, the seller knows the buyer is serious and is more likely to close the deal. The most compelling offer a buyer can make is an all-cash offer with a sizable down payment.

Let’s go back to the mythical money bag. Typically, buyers come to close with a bank check or have already transferred funds to a settlement agent or office. Whether they have a bank check or the cash was transferred in advance, the settlement agent takes the funds and pays them to the seller, the lawyer (if any) and anyone who needs to get paid after the deal is closed.

In addition to making offers with cash, fraud is rife in the world of bank transfers. You must make sure that the bank transfer information is correct because as soon as funds leave your account, they go to the recipient’s account. And, if you click on the wrong link or send funds to the wrong place, you could lose all of your money.

Don’t set up a bank transfer without first checking your account information with the clearing company. If you receive an email that allegedly came from a settlement company or a title company, call them directly to make sure you are receiving the correct account number. It’s hard to see how scammers and attackers can send phishing emails to shoppers who are within days of closing, but this happens more often. Beware of any emails that claim to contain bank transfer information for your transaction.

For our reader, do not plan to see this money bag until closing time. Instead, schedule a bank transfer of funds and let the professionals on your team guide you accordingly. After all, you need your title and the keys to your new home, not a conversation with the FBI.

Contact Elijs Glink and Samuel J. Tamkin through her website ThinkGlink.com.

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