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Bad Business Indeed!

We all have our horror stories to tell when it comes to a transaction gone bad. It may have been a loan where the client wasn't really qualified to a agent that never answers their phone.

How about this horror story for any agent? Two offers are made on the same property. One of the offers is an ALL CASH offer. It's a pretty good offer and within the range that the sellers are willing to accept.

There are a few minor details in the offer to clean up so a counter offer is prepared. One of the contingencies was that the Buyer is to provide proof of funds in X amount of days to show the seller that they do have the cash funds they offered for the property. The buyer's agent says 'no problem'.

The Counter Offer is sent over way before the response time has expired.

A little bit later the buyer's agent calls and says, "We're not accepting the counter offer because the buyer doesn't have all of the cash funds offered ....and only has X amount".

EXCUSE ME?????

How would you react to this scenario?

Posted by Celeste "SALLY" Cheeseman HAWAII Relocations & Real Estate on 08/01/2009 04:21 AM

Comments (75)

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75 Comments on Bad Business Indeed!

AUG

I have my fair of experiences where deals have gone south, and it is very frustrating! If I lose a deal because for a fair reason that is business, but what frustrates me is when I have done everything that I could and gone above and beyond and then the client decides that LO B is closer so I am going with them. And then they want everything that I have done! DAC

Put the entire package in the shredder.

It's worthless and is just taking up space.

If they wish to resubmit, they should do so with proof of funds, which should have accompanied the offer in the first place. I don't know why the seller even took the time to counter an incomplete offer.

Not even worthy of a phone call.

It is sad to hear all of this you have mentioned in the Blog , Waste of time and efforts ,some people just think we have the time in the world .

ARGH is what I think. I have a lowball offer that we received yesterday. We countered at below neighbornood average. The email I just read was from the agent is "my client think thats too high" WHAT? Waste of time!

Any cash offer should be accompanied by proof of funds just like any offer with a mortgage contingency should include at least a prequalification or better yet preapproval. Looks like the buyer's agent did not do their job and wasted everyone's time.

Sally Jo, maybe all of us should show an REO first- we learned the the hard way (but got the buyer the house by the skin of our teeth) that they MUST have proof of funds along with the offer. Had we lost the house, there isn't an offer that would have gone in without all proof needed (whether downpayment funds proof or cash offer proof) on ANY property, bank owned or not. It took a very short tme to make that a habit before we actually go out and look at houses. While the prequal (must indicate an acceptable FICO score, demonstrating that credit was pulled) was a known, proof for any seller certainly sweetens the pot (and eliminates your scenario)...

A waste of time for both you and the buyers agent. Why even write a contract if your client refuses to provide proof of funds??

A cash offer should show proof of funds .We have a Buyer's financial information form we use with an agreement of sale.

Celeste,

Sounds to me like the agent who wrote the offer was a wee too desperate to just get something in writing. What a total waste of time.

Rich

Put the darn thing in the round file by the side of your desk and go forward.

I'd be calling the buyers with the other offer before the other agent finished speaking!

I agree with Lenn, put it int the shredder.

This could be fraud - a straw buyer offering cash with the sole intent of tying up the sale, keeping the property on the market to increase the DOM. In some cases when the deal is finally cancelled, the seller, needing to sell quickly, lowers the price and the real buyer (a friend of the straw buyer) steps in and snatches the house at the reduced price.

This is a serious issue with REO's and one of the reasons that many REO listing agents require that the buyer EMD be held by the seller's title co. This way if the seller suspects foul play, they can tie up the buyer's deposit. Turn around is fair play as they say.

Sally,

Around here proof of funds must accompany every offer. Now with a higher counter, the buyers might not be able to go up to the increased number but one would think there was some play...

Sally - Would just simply move on to the next buyer. It happens sometimes. Even with all the proof of documentation such as proof of funds, a buyer can still get cold feet. Or have those funds invested in a risky speculative investment in the stock market. Either way, I would not let it get to me too much and move on to the next deal, either the other buyer or wait for the next qualified deal. The bigger question is that the buyers agent who wrote the deal needs to qualify his folks a little bit better before submitting an offer as well.

Sally, I don't submit cash offers without proof of funds. I remember one time I was explaining to a potential client that he would have to provide proof of funds, that I would not submit an offer for anything without POF. He was indignant and left. Found out later he didn't have any funds...

It is only logical, if you have to prove a buyers ability to secure a mortgage then why not have to prove they have funds available.

Ducks in a row BEFORE the offer is written...cash...3rd party fund verification...Mortgage...magic approval letter from a locally recognized lender...closing...you bet !

Sally...

We had this scenario on an offer we made on an REO property ... the buyers were receiving a settlement that was already awarded. We provided a letter from the attorney saying the check would be delivered to the buyer in seven days.

No go, but at least we offered a reason.

I just had a bad day with a buyer who did not want to hear the truth. It was good to read your comments. In a twiisted way, it brightened my day. The other realtors are right, as they say in tennis, "Recover and get ready for the next ball, because it is coming back."

I was just involved with one that went to court and up on appeals. I won. I was the real estate attorney on it. I'll post on it in a bit. I'm with Lenn.

In writting and proof of funds...thats the bottom line...fake fake fake.

Just had a "cash" buyer write an fake $5,000 certified check and give a phony POF. Funds were to be wired from a Swiss bank account...turns out the guy is a felon who has embezzled 4.3 mil, and in 2001 did the same scam with a 2.5 mil house in CA...can I pick em or what?

And this was a referral from a person I know!!!!

All cash offers require proof of funds With the original offer.

Well, at least in Mi.

The same as a pre-appoval letter.

Better sooner than later. We had one we accepted and we were still calling ten days later for the proof of funds. The realtor was well known for selling luxury properties. About 15 days later we get a new supplemental asking for a conventional loan and a contingency based on their house selling. It was not accepted, but we lost marketing time. Never again.

back again. This is off the subject and i am sure you have got this suggesstion before. I would love to see a marketing piece with you satisfied customers smiling in a photo that says, "Say Cheeseman"! Couldn't help myself on that one.

Sally, we had this happen to us recently. The proof of funds didn't pan out. The buyers defaulted on five contracts and lost their earnest money deposits.

Now would not a real estate agent obtain a proof of funds documentation of sorts prior to sending a cash offer over to you? Perhaps I am wrong...sorry!

Sally, along with everyone else, my opinion is that the proof of funds needs to accompany an offer. This is something that I explain to buyers before we start working together.

Sally - I purchased my last home cash. Although I had proof of funds, not one of the 3 agents of the homes I made offers on asked for POF. I ask for it, especially in today's market.

At least you got all of this drama out before getting into escrow.

Could have been worse, I suppose.

Sally we submint proof of funds with offer ( and it has to be legit). We also require proof of funds on the lower end properties (with the likely hood of mulitple offers very high). This was going on back in 2004 -05 and so called 'cash' buyers were in fact, not cash buyers.

Where is the other offer? Can you put that one back into play?

Proof of funds should have been submitted along with the offer, not after negotiations have started.
Buyer agent didn't do his/her job by not submitting proof of funds. Listing agend didn't do his/her job by not requesting proof of funds before allowing seller to counter.

Sally - Next! I agree with about everyone else here... w/o proof of funds there is no offer... Next....

Just my 2 cents...

Sally - what a colossal waste of time. Someone was not doing their job. Next!

Jeff

Hi Sally...Proof of Funds is Good, Good thing you Countered asking for Proof, better to know now than later.

This is not done here, but I like the idea.

Cheers, thanks for sharing your story.

We have an 'Additional Clause Addendum' in AZ with a paragraph on all-cash offers. Buyer signs that they will show proof of funds within 5 days of acceptance. It accompanies an all-cash offer. Just saying you will pay all cash is not sufficient.

That buyer was playing games. With his agent and ultimately, with you.

Filed under 'Nice Try, Time Waster' :)

Ugggh. I say it time and time again. It's those type of Realtors that give all of us a bad name. What was he/she expecting when writing up the offer. To call it a cash offer is a an out and out lie if the buyer does not have the entire amount available. Keep up the great work Celeste.

Dawn, that is amazing... People have a lot of nerve, eh?

C-Sally-C, I would move on as fast as I can. That buyer wasn't square with their own agent (who appears to have missed a few details).

Featured @ Club Chaos

Sally, I'm sorry to hear about this. I have heard about lots of crazy deals gone bad this week. I had one of my own that I'm thinking of sharing......

In retrospect, I guess the seller could have responded to both offers with a multiple counter offer.

I'm sure your sellers were upset. Do you think that the agent knew there was insufficient funds available when the offer was written?

I don't know why agents send offers without preapproval letters or proof of funds anyway. Then to say that they do not have all the funds after they make a cash offer is just crazy. The agent wasted their time and everyone Else's time as well.

I agree with Lenn completely. Once a buyer has misled you as to their cash position or their credit position you really can't trust anything they say.

I have received three low ball cash offers on properties in the last couple of months. I love the other agent's response "but it's cash". Yea, but it's NOT ENOUGH cash.

The other agent should have seen the proof of funds before submitting the offer. Hope the other people were still interested!

Lenn, of course is right on.

I had one a year ago CASH and the buyers agent accepted a personal, delivered to title company, check bounced, seller had already signed closing docs. The other title company was dispersing the funds when the other title company just happened to call the bank to ask if the check cleared and away we go.

Bgpic11142008103101_l Featured in M.A.N.C.R.O.W. CONGRATS!

I would tell the buyer's agent that the seller (with seller's permission obviously) will entertain the offer when proof of funds is presented.

This is a no brainer!

I had a manager of an office submit an offer this week, with no prequal. She said "trust me" the buyer is good.

I requested proof of funds or a prequal and the agent got pretty snide with me on the phone and stated the lender (Wachovia) is no longer providing prequal letters, didn't I know that?

Seller outright rejected that one.

Total waste of time -- shred it. IF the buyer comes up with the cash later, then they can resubmit IF the property is still available. But with luck the property will be sold before that happens.

I say...NEXT!

Sally - I agree with Kat - next! That is surprising that the agent didn't provide the proof of funds with the offer.

I'm sorry this happened. My next word would be "NEXT"... It's unfortunate. No ones happen.

I never accept an offer without proof of funds attached. Any agent doing a proper job would not submit an offer without it.

I would have asked the other agent what the buyer would have done if the sellers had accepted the original offer from the buyer without proof of funds. Where would the funds have come from? Then I would thank them for wasting everyone's time and move on to the other offer.

Dennis: It is frustrating!

Lenn: We did :)

Georg: Unprofessional too.

Laura: Argh ...yup

Auntie: Scenario is coming up :)

Laura: No much wasted time...I chuckled at the explanation of why they couldn't show it ...up front.

Gita: I agree.

Richard: Just a weeeee bit :)

Dick and Dixie: Done!

Jennifer: Hmmmm

Dan: done!

Irene: A given.

Christopher. Exactly.

Andrea: Which is usually the case :)

Sally & David: All ducks indeed.

Richard: I suppose waiting for that check settlement before putting an offer in would have been sweeter.

Carol: It sure is!

Just because a buyer tells me "I'll be buying with all cash" I -- not the seller -- require proof of funds. If they aren't going to be able to verifiy their ability to purchase, my availability to show them properties is limited. And for your question -- I'd move on to the second offer submitted, and thankfully you received two.

Sally, The offer should have come over with the proof of funds letter, as so many have mentioned here. I guess this is a gotcha for the buyer, isn't it? That's probably the reason you didn't get it with the offer - they didn't have the funds.

Sally maybe the Buyer was expecting to hit the Lotto in the next couple of days :)

A cash offer without proof of funds, has as much validity as a verbal offer. Sorry, no can do!

Hey....what a story. Geeze, I can't imagine anyone doing anything without "proof of funds!'

Patircia aulson

Shake my head and move on. Mark it off as something to write a blog about. Thanks for the post.

Hi Gang! Thank you all for your input on this. I encourage all to read all the comments here because most of them are spot on! Get proof of funds! Even if they are putting a down payment of 20%. You want proof of those funds. I'm surprised that many are running around 'pretending' they have big bucks.....or a 'tactic' to get a lower price? Whatever the reason...the agent and the buyer were sure not up front and honest.

No wonder we get a bad name. It's unprofessionalism at it's worst!

Good post, thanks! Cash is NOT always king.

It sounds like the buyer's already playing games; I would advise moving on to the next one.

AUG

George: Now you got Gary telling me he's won the lottery lol!

Sally, It should be in this world of Real Estate (which I am still learning) that not much surprises me anymore..then I read something like this. Seems it would be nice if RE rules and regulations were the SAME across the Country.

Sally - I learned this the hard way this year too. I have even had buying clients be offended at providing "proof of funds" with a cash offer. It all boils down to that movie line "show me the money".

I don't know how I would react, since I'm not a Realtor, but I thought I would tell you that this doesn't surprise me one bit. I put a boat on craig's list once and I priced it super-under value. I wrote on the ad, "No negotiating. Firm on Price. Don't even ask."

Yet, some guy still drove an hour to my house to offer me a thousand under.

I don't understand how people's brains work sometimes.

Outcome of this situation:

The second offer was accepted with proof of funds.

Escrow opened!

Hooray!

I have received a few offers on REO listings where the buyers agent submitted a "line of credit" letter as proof of funds for a cash offer. In my little brain it seems like if you have to ask the bank for the money from the line of credit it's not cash. Is it just me? I think not...

Happens everyday. Your seller countered. The buyer can't meet the terms. NEXT!!

The agent may have been relying on what the buyer told him. He too could have been hoodwinked. I would not hold this gainast the agent at all. He's not the buyer.

AUG

Hey Sally, I got this piece of swamp land in the mountains, has some protected wildlife and fish, zoned sort of available for a home, but I know you could build a nice cabin on it, probably even build>>>> ok never mind.... Hey my property is as solid as your cash buyer?? Yep the old story... swamp land.... not a scam.

List and Sell (and if you have cash then show it or go home) (kind like poker) Gary @ RentonHomeFinder.com

AUG

I'm with Lenn. An all cash offer without proof of funds is like a offer with a loan with no Preapproval letter. Means nothing to me or my sellers! SHRED SHRED SHRED LOL

I suspect that this buyer has been aced out of a lot of offers - always being told that there are multiple offers and others were better than his, so he decided to tie this one up and worry about the funds later. If he was able to come up with them after all, good.

AUG

Sally - I have a cash offer right now that has taken a week to get the buyer's agent to submit proof of funds. Finally got it today. It's been like pulling teeth. Amen.

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