In our overheated Silicon Valley real estate market with so many multiple offers, a lot of properties are selling to “all cash buyers”*.  Some of the contracts are written as all cash when in fact the buyers are actually trying to get a loan (for all kinds of reasons, perhaps including tax reasons). Listing agents and home sellers are wary of the promise of an all cash offer when the close of escrow is long.  Really buying all cash?  You can close in a few days, not a few weeks, if that’s the case.

Home buying all cash but not really

What’s the problem with getting a loan, anyhow?

For sellers, it’s a matter of risk.  First, there’s the risk that the funding will fall through for some reason or another.  Second, there’s the risk of the home not appraising to sale price (a common experience when prices rise rapidly, as they do now).

If you are truly purchasing “all cash”, then writing the contract for a shorter close of escrow will underscore that there’s not a secret loan happening in the background.  How fast is between you, your agent, and the seller and his or her Realtor.  I’ve closed properties without financing in 5 days, and did that again just last week.  It sure makes the promise of “all cash” believable.

*In March 2014, there were 1520 single family homes which sold/closed escrow. Of them, 308 were reported on the MLS as being “all cash, no loans” (20%).  For condos and townhomes, there were 575 closings, 128 of which were reported as cash sales, or 22%.

Related reading: 

Why do sellers care if the offer has a loan or is all cash?

Why would a cash offer fall through?

Cash offers: what do you need to know if buying “all cash”?