Question: I am selling my home to a real estate developer, who submitted a cash offer. Now, he is asking for an extension to allow his lender some more processing time. I am angry. I did not think he was using a lender, when I accepted the “cash” offer. Can he do this?
Answer: I will let you in on a little secret…there are two types of cash offers. Each one provides different levels of confidence. However, this is rarely fully explained.
A true cash offer is not contingent upon the buyer obtaining financing, and confirms the buyer will not be using a lender at all. This conveys the most confidence to a Seller, and is likely what you thought about your situation.
A “cash” offer is simply not contingent upon the buyer obtaining financing. The buyer may use his own cash or borrow the purchase funds from a lender. If this type of “cash” buyer fails to get a loan, he will lose his deposit – but still walk away from the deal.
Should this type of transaction be called a cash offer? Probably not. In your case, you must choose to get past your anger, and allow the extension, or let the buyer walk and keep his deposit. Hopefully, the deposit amount is sufficient to consider the latter option.
Attorney James Haroutunian practices real estate, estate planning and business law in Billerica at 790 Boston Road and can be reached with questions at 978-671-0711, prioritylaw.com, hlawoffice.com, or via email: James@hlawoffice.com.