Offering Cash with a Contract? - Distressed Vendor

When dealing with a distressed vendor, Is offering cash as part of the deal viable?

Say you agree on 350k for the property, with 10k cash to be given to the vendor once the cooling off period expires.

I understand this is risky, but in certain situations is it worth doing?

I am thinking it might provide a Win/Win to all involved...provided the deal goes through of course?

Anyone ever done this?

 

@hammer

At face value I wouldn't do this.

Do you mean cash as in folding $tuff? If you mean offering a cash offer as is traditionally referred to this means a contract that is unconditional on finance, then this is often a reasonable negotiating point to show you are qualified and ready to go. You become a more attractive buyer.

I personally would offer any part of the consideration in physical ca$h. That is not likely to sit in any trust account and could be spent and never recouped if the contract and settlement process turns sour.

 

Check the implications with your property lawyer - paying more than 2 instalments could have legal implications 0 instalment contract.

 

I do mean folding stuff. or a check?

I can't buy as a cash buyer. I do need finance. But I was thinking maybe offering 10k cash as part of the deal would help me secure the contract for a cheaper price.

Is the risk/reward worth it?

 

Please seek your own legal advice however if and I mean IF you were going to go down this path the only way it would play out is you provide 10k at the time of contract signing.

Reason being is the vendor will not sign for 10k less if they are not getting the 10k in cash as the contract cannot say 10k will be paid in cash once cooling off has completed.

You will in theory waive your cooling off because if you do good luck getting back the 10k.

You will also not be able to put any conditions on the contract (except for showing tenants through) because if you terminate the contract good luck getting your cash back.

You will also have to pay CGT of this 10k when you come to sell.

The vendor isn't a builder they would of had to of held the property as an IP as they don't pay CGT on their PPOR.

Is it worth the risk? It is up to you but for the sake of 10k I would rather have it all legit as I wouldn't want to be questioned by authorities over this.

 

Umm just approve release of deposit/$10k from deposit? All legit and disbursed from agents trust account once you go unconditional, and written into contract.

Not a fan of releasing deposits at all, but depends on circumstances

 

You could be defrauding the state government and assisting others to defraud the commonwealth.

You can hand over a cash deposit as 10% of purchase price and as said above allow release to vendor.

 

Yikes! Fraud or doing any thing dodgy is certainly not the aim of this exercise.

Getting the money quickly to the distressed seller is the plan, or at least an option as a potential strategy..

I didn't know about the deposit release. That's a solid option.I will look into it.

Thank you!

 

I don't see why this would be particularly enticing for a vendor though - not unless they specifically asked for it. It doesn't seem to me that any vendor would be so enamored with this so as you actually reduce the price they would otherwise accept...

And if a vendor specifically asked it from me, I would 100% say no because of the risks in handing over cash before settlement.

 

It has been done heaps of times but you are avoiding/reducing stamp duty. Releasing deposit is a better way to go.