Is This Really A Cash Offer, Or Just A Negotiating Tool???

Real Estate Agent with Lenn Harley,, MD & VA Homes and Real Estate 303829;0225082372


No need to spend the time writing a Contract of Sale for a CASH OFFER for a buyer, unless the agent has verified the buyer's financial condition.




Finally, does the buyer have liquid funds to make a significant earnest money deposit.


WHY DO BUYERS USE "CASH" AS A NEGOTIATION TOOL??  Many believe that CASH BUYERS are the best thing since a chocolate-nut brownie.  CASHThey can be.  However, many "cash buyers" are not and will try to get a Contract of Sale and then change the terms and conditions of the sale to something other than real CASH.


What I've found over the years is that many buyers use CASH BUYER as a NEGOTIATING TOOL.   Get a contract of sale with a low price on the promise of no financing contingency.  Then notify the buyer and buyer's agent that "Oh, by the way, the buyers will be financing the purchase.  Or, that the buyers plan to close in an entity other than HOME OWNER OCCUPANTS. 

The buyer is entitled to have FACTS in the original offer since THAT is the basis for negotiation and acceptance of the contract. 


Real estate agents, buyer's agents and listing agents have to be able to read these offers and know how to verify the sincerity of the CASH BUYER.

This post inspired by Scott Godzyk's post, When is a CASH Offer not really a CASH OFFER?


Courtesy, Lenn Harley, Broker,, 800-711-7988. 



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Mary Yonkers
Alan Kells School of Real Estate/Howard Hanna Real Estate - Erie, PA
Erie/PA Real Estate Instructor
Lenn, when I teach a negotiating class I have three words. Verify, Verify, Verify aka Documentation.

Good post.
Apr 27, 2013 05:42 AM #22
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Ah yes, the dreaded cash buyers, the bane of the standard buyer in our multiple offer market.  This is excellent advice, but it is extremely difficult to predict what a cash buyer is going to do when under contract.  I think it should be an automatic trigger for the seller to cancel if they turn around and say they are going to get financing.

Apr 27, 2013 05:43 AM #23
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Mary.  It's fundamental.  Sadly, many agents and sellers believe that "cash offer" has more meaning than it does.

Jane.  HA!  It is.  When that happens, we just get ready for settlement under the ratified contract.  If they don't show prepared to pay CASH, they are in default.

The property is immediately re-listed and if the buyer still wants it, they have to agree to a price acceptable to the seller and provide proof if loan approval.

We've had a few buyers who used CASH to negotiate a good price, then try to get the property with financing at that low price. 

They must think we can't read.

Apr 27, 2013 06:18 AM #24
Liz and Bill Spear
RE/MAX Elite 513.520.5305 - Mason, OH
RE/MAX Elite Warren County OH (Cincinnati/Dayton)

Lenn, I'm working with a cash buyer, and he's provided proof of funds and then some :)  But many cash buyers overestimate the power of cash and how much of a discount a seller may be willing to give, assuming they're willing to give one at all.  Bill

Apr 27, 2013 06:28 AM #25
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Bill  Cross your fingers.  Most cash buyers are stright shooters.  Then there are some who use cash as bait and, even though they can buy CASH, try to switch. 

Most are good, but not all.

Apr 27, 2013 06:38 AM #26
William Johnson
Retired - La Jolla, CA
Retired Real Estate Professional

Hi Lenn, 

For Cash Sale

Step 1 Get the Earnest Money Deposit up to the legal limit of 3% of the purchase.

Step 2 It is understood that Buyers Cash Offer is All Cash already in the form of liquid funds and requires No Financing to be obtained for any part of the purchase. In the event that the Buyer decides to finance any portion of the Sale after submitting an All Cash offer, Buyer releases the Earnest Money Funds to the Seller. There will be No Appraisal or Loan Contingency. If there is any delay in closing because of Buyers decision to finance any portion of the sale, Buyer will be given a Notice to Perform and if within 48 hours if Buyer is not in compliance of this agreement or if the Escrow is to be delayed further, the transaction is hereby canceled and the Seller to retain the Earnest Money Deposit as earned. 

The language used needs to be discussed and approved with the Broker but language in the counter offer along these lines could be useful. Please NOTE: Any language used should be first discussed with the company attorney to be sure it is compliance with state and or Federal law. Where the Buyer obtains the actual cash used for the purchase may not be the same source supplied to prove the Buyer has has sufficient cash to purchase, should be of no further concern to the Seller. But the Seller has another right to enforce the times specified in the contract should the Buyer cause a delay in close because they chose to use financing.


Apr 27, 2013 07:09 AM #27
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

William.  Very good guide for agents not familiar with cash transaction.  Thanks.


Apr 27, 2013 07:15 AM #28
Kat DeLong
LakeView Realty Enterprises, Inc - Lake Arrowhead, CA
Realtor DRE#01235311, Lake Arrowhead Real Estate (

Great points, Lenn. I've SEEN a few buyers (not mine) use the old "CASH" offer to get the contract accepted, then as we're dancing along, somehow it becomes a loan! Yes, I always ask for proof of funds, but sometimes, those sneaky ones slip through.  Grrrrrrrrrrrrrrrrr

Apr 27, 2013 09:35 AM #29
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC


Your right . . . . many times a "cash offer" is the start of the negotiations and the terms of the contract changes.

Good luck ansd success.

Lou Ludwig

Apr 27, 2013 01:00 PM #30
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Excellent points, Lenn!  Is that CASH offer, really CASH!  It would be interesting to have stats on when it isn't always so!

Apr 27, 2013 01:10 PM #31
Bryan Robertson
Los Altos, CA

I've had cash buyers use their "cash" to beat out folks then move ahead with obtaining financing (to the dismay of all involved).  I've seen others who write cash but fake their balances or have money in places it's hard to get it (overseas).  Cash is only cash if it's provable and all here.

Apr 27, 2013 02:10 PM #32
Hella Mitschke Rothwell
(831) 626-4000 - Honolulu, HI
Hawaii & California Real Estate Broker

"It will be a cash offer, except we have to sell our house first, on which we don't have a loan." Sigh.

Apr 27, 2013 02:15 PM #33
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

That's so crazy - If they say "cash" and don't actually have it, they have to know that the truth will come out soon.

Apr 27, 2013 03:44 PM #34
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M
Lenn - A cash buyer has to have proof of funds. I had a one buyer once buying a multi million dollar home who asked if he could provide just one account with the amount or did I need to see all of his accounts with all of his money. Was I tempted to ask to see them all . . .
Apr 27, 2013 04:04 PM #35
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Kat.  Show me the cash and we'll talk about taking the property off the market.

Lou.  They TRY to change the terms.  That's all they can do.

Myrl.  I suspect that it's more than we would expect.

Bryan.  Provable and up front.

Hella.  HA!  I had one of them about 3 months ago.  They wouldn't put their house on the market.

Marte.  It happens.  The problem is the financial damage that may be done to the sellers when the truth comes out.

Christine.  You need to see enough to cover the cost of the house. 

Apr 27, 2013 08:44 PM #36
Beth and Richard Witt
Long Island Cash Home Buyer - Huntington, NY
Long Island Cash Home Buyer 516-330-6940

When we get a Cash Offer... Fund Verification is the next step and if we don't get it we don't take the offer... Our feeling is that we don't care to do business with people that lie right out of the gate... Of course this is our position on homes we own and are selling... It is a common practice but agents need to do their due diligence and save themselves a lot of trouble...

Apr 27, 2013 08:45 PM #37
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Hi Lenn.  Great check list.  Too many "cash" buyers have strings attached to the cash.

Apr 27, 2013 09:00 PM #38
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Richard and Beth.  With our own properties, we can proceed as we wish.  When representing a buyer or seller, our job is to make sure that what we present is real.  I have always believed that the agents are the first line of defense against those who would deceive.

Conrad.  Indeed.  That's my experience too.

Apr 27, 2013 09:16 PM #39
Jeff Pearl
RE/MAX Distinctive / LIC in VA - Lovettsville, VA
Full Service Full Time Realtor

What I've found is that they actually are just using the word " cash" most of the time. That word is a red flag.  I am working with a cash buyer, but he has a letter from his bank stating he has funds on hand and access to those funds. That's what I use for his offers. Most " cash" buyers i recieve offers from usually add in later that they have to get funds form a 3rd party  "investor".

Apr 27, 2013 11:22 PM #40
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Jeff.  A buyer with a bank letter is fine but I'd want a high EM.  Unless that money is in an account that he can't access, he still has control.

As for the "cash" buyers that represent investors appear to be straw buyers or close to it.  Not going to take a property off the market for them.

Apr 27, 2013 11:28 PM #41
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