Question on Cash Offer for Texas SFH from unknown investor

Buying & Selling Real Estate
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Question on Cash Offer for Texas SFH from unknown investor

Andres Perez
Investor · San Jose California · Member since 2019 · 7 posts · 2 votes

Hi All,

Hope all is well and happy Friday! I have a cash offer from an unknown investor for a property I own in Denison, Texas. He texted me out of the blue, as others had in the past, but this one investor did follow through on sending a written cash offer by email for a reasonable price.

I am leaning towards accepting the offer but wanted to get some advice on whether there is anything I should be concerned about in terms of any potential fraud or wrong doing from the buyer as I have never met them and I would not be working with a seller agent (or buyer). Given I'm the seller I would assume that as long as we use a reputable title company there should be nothing to worry about on my end? Or should I take other precautions to avoid other risks I'm not aware of?

Thanks in advance for any advice you can provide on this!

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Guy Gimenez
Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
3y

@Andres Perez

1.  Is buyer an individual or entity?

2.  Require use of the TREC form if it's a residential property

3.  Prohibit any assignment of the contract and if it's a cash deal, require closing in 10 days. This will weed out the wholesalers. Make sure all time frames in the contract are strictly adhered to by including a "time is of the essence" provision

4.  Get proof of funds, meaning actual funds on deposit in the buyer's account...not a bank letter

There are tons of things to be concerned about and dozens of ways for the buyer to tie you up in a contract and leave you hanging. Remember, structuring a deal is more than just a reasonable price...the terms are also important. 

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  • Guy Gimenez
    Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
    3y

    @Andres Perez

    1.  Is buyer an individual or entity?

    2.  Require use of the TREC form if it's a residential property

    3.  Prohibit any assignment of the contract and if it's a cash deal, require closing in 10 days. This will weed out the wholesalers. Make sure all time frames in the contract are strictly adhered to by including a "time is of the essence" provision

    4.  Get proof of funds, meaning actual funds on deposit in the buyer's account...not a bank letter

    There are tons of things to be concerned about and dozens of ways for the buyer to tie you up in a contract and leave you hanging. Remember, structuring a deal is more than just a reasonable price...the terms are also important. 

    6Reply
  • Lucia Rushton
    Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes
    3y

    @Andres Perez is he trying to wholesale it ? I would suggest you have someone assist you on vetting him and the POF.

    If you want to DM me i can take a look at it for you.

    1Reply
  • Andres Perez
    OP
    Investor · San Jose California · Member since 2019 · 7 posts · 2 votes
    3y

    @Guy Gimenez - thanks for the advice! I will follow all the recommendations, ie TREC contract, short closing window and POF. If they are actually interested they should pro0vide.

    @Lucia Rushton

    @Lucia Rushton@Lucia Rushton@Lucia Rushton

    1Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    3y

    I bought a house cash in Dallas just a little while ago.

    I showed proof of funds in my LLC's bank account ready to go, we both allocated agreed to split the cost of getting a real estate agent or lawyer(ended up with a lawyer for a 1-time fee) to draw up the docs, and went our ways.

    2Reply
  • Taylor DaschBusiness Member
    Real Estate Agent · Temple, TX · Member since 2022 · 1k+ posts · 700 votes
    3y

    Yeah I would expect that as long as he has POF that it is legit. I believe fraud would be more on the buying side. If you go through a title company, get the contract looked at / drawn up by a realtor or lawyer, you should be good to go if you like the offer!

    [email protected]254-718-4249
    Taylor Dasch | EG Realty561 Reviews
    WebsiteView Page
    0Reply
  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    3y

    @Andres Perez     All kinds of risks with these kinds of blind offers.   Sometimes they work out, sometimes they don't.  

    #1 I always want to see real proof of funds....like from Merrill Lynch account, or some legitimate bank account.   Not hard money loans, which plenty of investors thing is same as cash.  They're not.  And they are getting more difficult to close.  In fact our standard Texas contract is getting ready to change next month to indicate if you are getting a loan of any source, as so many investors (and I'll probably get some haters here) think hard money is same as cash.  It's not.   So plenty of these blind offers act like they have cash, and they don't.

    #2 You want to make sure they will close the transaction themselves in their name.   Look for history of closing.  I always want to see how many homes they own, and how many in the area of the subject property.  I also look to see if they paid cash or got loans.   If they're lying to you now, why would you trust them throughout the transaction?   Are you their first deal or are you #100.   You don't want them not closing or trying to assign the contract or daisy chaining it to 1000 other investors and if those people don't bite, then bailing on you.  That's pretty common.

    #3 If they haven't seen it, what is the chance they retrade?   I see this all the time.   Offer $200,000 and then go see it and then tell you they need $20,000 discount because it needs a  new roof.  Commercial sellers have gotten smart and send a buyer questionnaire out to ask how often the buyer retrades.   No body likes retrade.

    #4....don't take chump change for option or earnest money....If they're going to buy your $200,000 house in 14 days, ask for $50,000 earnest money.  I mean that will separate the serious from the tire kickers.   If they can't pay it today, then how can they pay in 2 weeks.

    #5....why take a blind offer, vs putting it on the market and seeing what the open market will bring.   Plenty of houses in Sherman Denison get multiple offers.  Seems like last month market is picking up again.  Why not decide between 10 offers vs 1?   They can still be in the mix, but you might get even better offers.

    4Reply
  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    3y

    @Andres Perez   Also do they understand they are occupied, with leases and property management in place?   So they get to keep the lease in place?  What does it cost you to break your PM contract?

    The other thing in Denison...is it looks like the market is just getting started there.   Lots of great things happening in the area.  You probably have great interest rates and probably pretty good cost basis.   Why would you want to sell so early in the investment?   Who knows what the future will hold, but I would think these are very very tough to replace in today's environment.

    Denison just implemented duplex builds in these neighborhoods from what I understand, so that is going to make things even tighter.

    If you're interested in selling, we should put them on the open market and see if we can maximize your proceeds.

    1Reply
  • Andres Perez
    OP
    Investor · San Jose California · Member since 2019 · 7 posts · 2 votes
    3y

    @Bruce Lynn - great points Bruce. Thanks so much for sharing. I will definitely as for legit POF and dig deeper, the more I hear the more it seems there is something wrong.

    @Taylor Dasch - exactly Taylor, thanks for sharing! I will ask them for POF and see where this goes.

    Thanks again!

    0Reply
  • Joehn B.
    Investor · Houston · Member since 2022 · 80 posts · 44 votes
    3y
    If that doesn't work out, consider retail sale like Bruce said or if you want a quick out, offer it up here perhaps subject-to for an even better price :)
    1Reply
  • Andres Perez
    OP
    Investor · San Jose California · Member since 2019 · 7 posts · 2 votes
    3y

    Thanks @Joehn B.!

    0Reply
  • Taylor DaschBusiness Member
    Real Estate Agent · Temple, TX · Member since 2022 · 1k+ posts · 700 votes
    3y
    Quote from @Andres Perez:

    @Bruce Lynn - great points Bruce. Thanks so much for sharing. I will definitely as for legit POF and dig deeper, the more I hear the more it seems there is something wrong.

    @Taylor Dasch - exactly Taylor, thanks for sharing! I will ask them for POF and see where this goes.

    Thanks again!


     Yes sir, From what I understand, you arent looking to sell but someone reached out to you with an offer. I agree with the other people in that if you were looking to sell it would be best to go on the market, but I would have a realtor run comps and give you a Market Value for the property - if the cash buyer is close and is going to pay the closing costs, it may be better to go with them. Because even if they try to wholesale it you are still getting your $ and if they try to lower the price during the option period you can always just decline lol. Good luck!

    [email protected]254-718-4249
    Taylor Dasch | EG Realty561 Reviews
    WebsiteView Page
    0Reply
  • Andres Perez
    OP
    Investor · San Jose California · Member since 2019 · 7 posts · 2 votes
    3y

    Thanks @Taylor Dasch that makes perfect sense!

    0Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    3y

    What's their EMD?

    [email protected]248-209-6824
    Logical Property Management4.9459 Reviews
    WebsiteView Page
    1Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    3y

    Always flinch at the first offer, especially if unsolicited.  

    Sell as-is, where is. They can inspect but let's them know up front you will not be entertaining after inspection corrects or price adjustments.   

    1Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    Call and vet them, what are you asking us for?

    0Reply
  • Ronald RohdePro Member
    Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
    3y

    It can be legit transaction, plenty of risk for seller, less so for the Buyer.

    0Reply
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