HELP! Buyers want to close all cash bc lender can’t perform

[Richmond Taylor]

Hello... please help. Closing is next week and buyers have requested an extension. Sellers refused to extend for a number of reasons. Buyers are now stating they will pay all cash at closing since their lender can’t perform. Appraisal results still are not back and there’s no way they will get the loan in time for closing. Sellers agent asked buyers agent to send an amended contract removing finance contingency and stating buyers will pay all cash. Buyers/buyers agent refuse to do so. Claim they will still close next week all cash, using current contract. Do sellers have to close and sign if buyers show up on closing day with all cash? Title has heard NOTHING from buyers bank/lender and closing is in 5 business days. Loan termination deadline is tomorrow. These sellers do not want to close with these buyers as they have been so difficult and are not cooperating. Sellers want legal docs stating cash if that’s how buyers will pay. Can sellers refuse to close if buyers bring all cash... since there’s no amended contract stating this all cash purchase? Or can sellers terminate? The sellers just want out of this deal at this point as the buyers and buyers agent have been rude and non compliant with financing. Sellers and title have no idea what’s going on! No cash proof of funds have been shared either.... ???

[Brit F.]

@Richmond Taylor, Your state my have different rules, but here's how things work in my state of TX: 

If buyers are refusing to do amend the contract to reflect a cash purchase, that's a red flag.  There's no good reason to not put it in writing, unless the buyers suspect they can't perform under the new terms.  Sellers are not obligated to extend an executed contract to let the buyer sort out the issues with the lender - especially if Seller has a backup contract.  In a softer market, and if seller wants to be nice, they can extend.  In a hot market, buyer is going to lose their earnest money and the house.

However, most sellers would be happy to have a buyer pay cash, and seller can certainly close without knowing what the outcome/funding source will be for the buyers.  After sellers close, if buyers can't close on the current contract, seller should keep the earnest money and move on to a new buyer.

Typically, the funding change is the other way around, where a buyer initially presents a cash offer, then changes to a financed one, which increases the risk for the seller.  Deals can fall apart quickly here because again the seller is not obligated to allow a change in funding source.

Sellers can't legally choose to not close just because 'buyers are difficult'.  Hypothetically, if sellers choose to not close while buyer is still performing, buyer can sue Seller & Broker, and buyer would have a legal advantage.  On the other hand, as soon as the buyer stops performing, the legal advantage changes to the seller.