I have my home for sale currently. My realtor is telling me I am probably going to be receiving an offer soon and that it may be a cash offer. I have sold and bought a number of homes but have never received a cash offer. How does the process work? How does the cash get verified? How to keep from getting ripped off?
The party that is about to make the offer is from a foreign country.
Never done that so no experience here. Methinks when your bank gets the cash and verifies it, you are probably safe.
[but I’m guessing. Does your realtor have advice?]
In most markets the escrow closing officer is responsible for assuring “good funds.” The term “good funds” in this case means real money.
With a foreign buyer, I’d recommend double checking with your bank as well and getting verification of good funds deposited in your account in writing from a bank officer.
Depending on what state you live in, you will either be using a closing attorney or a title company to settle the transaction. They will be responsible for ensuring the funds are good before you sign off on the title. Since its a foreign buyer, the funds will likely be wired to the escrow account of the attorney/title company the day before your closing date. I don’t see any red flags that could cause you to get ripped off…
The funds will not go directly to the seller from the buyer. They will go through the escrow account of the settlement agency. Its their job to verify funds are good before completing the transaction. The seller can then choose to receive a check or a wire from the escrow account.
thank you,
thats what I was hoping to hear
KIR
Another way to think of it is that all real estate transactions are settled in cash at the table. That cash will either come from the buyers personal funds, from a lender, or from a combination of both. In all cases, the closing agency is responsible for verification of funds, just as they are responsible for ensuring the title is cleared of all liens.
Given this would be an offer from a foreign buyer, there’s several additional things that I would do if I were in the position of the OP:
#1. Make sure the listing broker holds the earnest money deposit and ask the bank to verify funds for that money ASAP. Make the earnest money deposit non-refundable if default is no fault of the Seller.
#2. Counter the original offer with a requirement for proof of sufficient funds to purchase by a date certain.
#3. Establish an agreed-upon closing date as a condition of sale.
#4. Insist that your listing broker represent you exclusively.
One problem with transactions involving buyers not accustomed to US markets is that where they come from things may be radically different than they are in the US. That leads to confusion and confusion leads to time off market for your house. Time off market is bad for the Seller.
Note: This is not legal advice. I am not a lawyer, I was a RE broker for 12 years.
I am a retired real estate broker after 4 decades of life in Philadelphia’s hottest market. I have handled, made, accepted a number of cash offers, even to the point of having a buyer show up at the closing with a grocery bag full of cash.
When your agent presents an offer to you, there should be proof of the buyer’s ability to carry out the offer including documentation of the source of the funds, including proof that they exist (e.g. print of the bank account showing it, proof of securities ownership to be sold, proof of other salable items such as valuable art, precious metals, etc. AND !!! a substantial earnest money deposit in jeopardy against buyer’s voluntary non-performance-10% of the offer is good. DON’T concede on the earnest money, if 10% won’t fly, get many thousands to keep the buyer honest. The amount depends on what it takes to scare the buyer-$10,000 is just gas money to a millionaire but is really significant to a $20,000 a year worker.
I agree, and depending on the Buyer’s native country, I would personally get involved in the process. The Buyer should be able to put a meaningful amount of money at risk, these kinds of situations can cost a Seller a lot of time off market, and that equates to real money lost.
…and not only time off the market which can be critical depending on the financial climate’s cycling, but properties seen as sold then again back on market often create a suspicion in the buyer pool of “something wrong with the property” which can easily become a permanent stain costing many thousands of dollars. The seller also incurs the liability of forfeiting his earnest money on his next purchase and other liabilities for non-performance, perhaps even devastating family or career injury.
When showing a home to a savvy Buyer, they will often have two questions as they enter the home:
One of the worst scenarios for a Seller in a declining market is to get tied up with unmotivated Buyer, have the deal fall thru and end up with a stale listing.
Often the only way out of the dilemma is to lower the asking price.
https://www.agweb.com/news/policy/politics/arkansas-takes-foreign-land-ownership-new-rule
OK if other states follow, and have other countries divest of their ownership of land in US, what will that do to the market? It is unconstitutional for a non citizen to own land in us?
Unconstitutional, no. It is generally up to state law. Arizona is in the progress of revoking non-citizens from leasing state lands. It’s a water use issue.
Interesting. So, now we have AK and AZ, AZ is about water, which is a rare commodity, and AK is about China Buying up large amounts of farmland, but any non-citizen owning land is being questioned. Was it ND or SD that was also becoming strict with non citizens owning land?
This is a good topic for a show.
In the SW and Intermountain US water rights necessary for irrigation are multiple times more expensive than the agricultural land is.
In this case it relates to ground water being pumped from the water table to grow alfalfa to send to Saudi Arabia to feed their cattle. It’s illegal to grow alfalfa there because of the amount of water it requires.
My understanding of the Saudi situation was that somehow the land they were irrigating with groundwater was exempt from normal water use regulation. It was a pretty rare thing and probably due to some legal glitch or special right that ran with the land state lease that the Saudis took advantage of.
Water rights in the western agricultural states can be pretty complicated and some lawyers specialize in water litigation for 100% of their practice.
Arizona to cancel leases allowing Saudi-owned farm access to state's groundwater | AP News.