Understanding a property sellers situation

2 Replies

Hey all,

This is my first post here. Thank you in advance for your attention. I am a first time buyer. My wife and I are looking at a townhouse in a popular/competitive neighborhood right outside of NYC. We have settled on a place and are in the process of making an offer. We would live in the bottom duplex and convert the existing floors into a rental unit for the time being.

To give you more background, we made an initial inquiry into a property and the broker was somewhat transparent. The seller had several other offers pending but they were still looking for more buyers. They assured me they didn't want a bidding war and merely wanted to achieve the asking price and best purchaser. I'm assuming they compare offers based on a few criteria, final amount, cash versus financed, buyer background, property intent etc.

I'm trying to figure out how differently financed purchases would measure up against each other as I naively assumed the seller gets the same amount. Additionally, we are fortunate to have some help from our families on making the purchase so we have been advised to make a cash offer. I've been told that we can get it financed on the backend without revealing that to the seller. We are doubly fortunate in that the person helping us with the purchase is experienced in the field and has the wherewithal to purchase in cash if necessary and has access to financing as well.

My questions are probably very simple and somewhat academic. I'm receiving a lot of help and counsel and I'm trying to understand some of the strategy that goes into this without asking too many remedial questions so thank you for your patience.

Could someone please explain to me exactly why a cash offer is advantageous for the seller?
What is the chronology of how the seller receives their payment from the buyer once the contract has been assigned?
How does the movement of funds differ on a cash offer versus one with bank financing?
How can one in good faith make a cash offer and then actually finance a purchase without violating the agreement of the original offer?

Thank you!

Cash offers are highly advantageous because offers made with financing contingencies can fall apart if the buyer cannot qualify. Also, you can close a LOT faster than someone wanting financing. If you pay all cash and then refi at a later date that has no effect on the seller. Generally, you wire funds to a title company and send them the contract and they handle everything from that point on. 

As noted, ALL CASH gets you and the seller to COE as quickly as possible, especially if you opt for AS-IS.  Assuming a great property, even with contingencies you can close in 15 days.

The funds are disbursed at COE, frequently by wire transfer to the appropriate bank accounts.

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