There seems to be a lot of mystique surrounding getting cash back at closing. And really there shouldn't be.
Getting cash back at closing merely means over-leveraging the property. (And when I say over-leveraging, I mean over th purchase price, not over FMV.)
A very simple example:
Buy a 100K property for 50K. Get a HML for 65% of LTV (65K). You just got 15K back at closing (less closing costs).
You can do different things involving seller carryback. Just make sure that any lender involved knows what is going on.
A couple more points about where the $$ are coming from:
It's NOT coming from the title company. They are just conduit.
It could come from the seller (but probably doesnt). That would mean the seller would have to bring cash to closing.
More than likely, it comes from some kind of lender. Could be institutional. Could be private.
I know someone who's standard deal was along these lines: Buy FSBO SFR at 85% of FMV, buyer pays all fees (no realtors involved). Private lender lends at 90% of FMV (NOT 90% of purchase price). Cash back on every deal.