Now, let's take another look at the house purchase scenario as earlier described. We would not suggest that the sale of a home for $400,000, or something on that order, would likely be consummated with cash. But, there remains an opportunity for the buyer to ‘save’ a few dollars. Suppose that the sale of Carl's home is contingent on an inspection. The inspection was not unreasonable, but there were a number of issues that Mr. Gregory thought should be addressed. Carl conceded these points, but preferred not to correct them. Instead, he promised to provide Mr. Gregory with $10,000 at closing. Mr. Gregory, under these probably off-book circumstances, could use the money for any purpose at all, correcting the inspection issues or otherwise.
On the day of closing, all the necessary parties are present and the all the elements are in order, save one: near the end of the proceedings, Carl is apologetic, but states he simply was not able to come up with the $10,000 as promised. He could, however, get fairly close and hoped it would be alright. He hands Mr. Gregory an envelope containing 75 $100 bills, for a total of $7,500. We strongly suspect that such a deal would have closed without incident. Cash is king.
