Cash Offers & A Couple Of Thoughts..

Over the last few years I've been in the position to deal with a cash offer from both a buyer's agent perspective & listing agent's point of view. Feel free to add to the story or share your experiences.

First, just because you are submitting a cash offer doesn't mean your offer is that much stronger and deserves to come in at 5% or 10% below the list price, especially in Houston Texas. Most if not ALL offers I have worked with are pretty solid nowadays. Almost everyone is going FHA or Conventional and is required to put 3% down. Gone are the days where agents used to wonder if the deal would make it to closing because of creative or tricky financing. I can't speak for the whole country, but I can get on my soap box with clarity from Houston.

When you submit a cash offer to my listing It needs to be done with a "proof of funds letter" & nothing else. My job is to protect my seller from tire-kickers & b.s. offers. Plain & simple. When I work with a buyer, my job is to ensure we are both serious about an offer that we submit and that we are taken seriously.

Here's a few things I've learned along the way:

1. A cash offer means you have LIQUID money readily available in a checking or savings account - period.

Money that is tied up in a 401k or glued to your portfolio IS NOT considered cash. There are rules, fees, time frames and other issues you may have to deal with "to get to that money" I am not willing as a listing agent to roll the dice and take my listing off the market if you have not shown the sincerity to take the necessary steps to pay cash for a home.

2. Money coming from a divorce settlement, probate, lawsuit or any other legal matter is NOT cash - it is contingent on YOU GETTING THE CASH. I can't tell you enough how this wastes everyone's time, especially the poor buyer whose agent says.... "just get a letter from your attorney" That's garbage! I will not use "a letter" as PROOF OF FUNDS and neither will most good listing agents. I don't care if it's coming from Judge Judy either.

3. Oversees money. I learned the hard way when working with a seller that the "cash on hand" proof of funds letter that I had received from Europe was worthless! Not only was it written in pounds, but the buyer had not yet obtained a green card. To top it off, the buyer had no idea that wiring over a million dollars was going to cost him X. When he found out, he reascended his offer. OUCH!

4. Money from another source. Again, it doesn't matter WHERE the money is coming from, what matters is that IT IS YOURS & IN YOUR ACCOUNT. Stories will get you nowhere fast or efficiently when searching for a home or trying to submit your offer. Trust is earned in writting when buying a home.

5. Cash is king in this market, especially if you are trying to find a place to park it in an unstable and volatile economy. Spend it wisely. Once you pay cash for a home that money is GONE! that's G-O-N-E. My point is that if your home isn't appreciating then your money is doing absolutely nothing but hanging around until you sell the home. Keep in mind that the average appreciation in Houston is about 2-4% minus inflation. And lets not forget that Houston is VERY neighborhood specific when it comes to "making money!"

6. Expect & demand MORE earnest money if you are given a cash offer. If Joe buyer is paying cash, then he sure as heck has 1% of the list price to put down as earnest money. Why do this? Feel free to ask & I'll explain.

Finally,

You're listing agent is always learning, but it is their job to know how to notice the difference between a real cash offer and a sophisticated dummy offer from an investor.

Greg Nino is your West & Northwest Houston Real Estate connection. Available 24/7.