We were approached by someone who is interested in buying our home. The buyer has provided us with an unsigned sales agreement as their offer. They are offering 1.5% of the purchase price as their hand money and we assume they have the money – its a cash offer. Are we wasting our time with these buyers?
The very short answer is yes! For starters, to be a valid offer, it must be in writing and signed. Without a signed contract, you have absolutely nothing to bind the buyer should you decide to proceed. What you received is not an offer at all and you should not give it serious consideration until the paperwork is signed by the buyer.
Hand money equal to 1.5% of the offer may or may not be sufficient depending on the individual circumstances. Sometimes that is all a buyer can afford. However, this buyer is supposedly paying cash so there should be no problem with them providing a more substantial deposit. Look for a minimum of 5% in this type of scenario. The hand money is your consolation prize should the buyer decide not to close after all contingencies have been satisfied – if you have moved out, you will need at least that much to compensate you for all of your moving costs.
As far as assuming they have the money to buy it, I would recommend that you not engage in any substantive negotiations until the buyer has proven that they do have the cash available to close. Talk is cheap, but if they really do have the cash, they will have no problem producing copies of statements showing the cash or a letter from their banker that they have the needed funds.
Your question addresses just a few of the hundreds of complexities involved in getting a home sold and highlight why it’s really important to engage a full-time real estate expert when buying or selling a home. Most buyers expect the seller to discount a home 6% when there is no Realtor involved, so there is rarely a benefit to a seller from being unrepresented.
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