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.
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.
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.
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?
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.