Why would a seller specify "cash or hard money only"?

Question

I'm reviewing some multifamily properties on the MLS and running the numbers for practice.

A seller of a triplex has the phrase "Cash or hard money only" in the property description.

Why would a seller accept only cash or hard money from a buyer? What is their incentive? If I have traditional financing from a bank, the seller gets paid nonetheless, so I'm trying to understand why they would only accept cash or hard money.

Any and all insight would be greatly appreciated. Thank you!

Taylor L. · Answer

The seller may know that the property won't qualify for financing for one reason or another. You may be approved for a loan, but that doesn't mean the bank will loan you money for every property.

Patrick Drury · Answer

@Christopher DruThat is exactly what they are doing. The seller doesn't care if the bank has pre-approved you. If the property isn't habitable by Fannie Mae and Freddie mac standards then the bank will not loan on it if you are using a conventional loan. The seller blatantly doesn't want to waste their time.

Christopher Dru · Answer

Thanks, Lucia - No, the listing doesn't say anything about repairs or work needed. The property looks to be in good shape judging from the pictures. Maybe there are more problems lurking beneath the surface.

Lucia Rushton · Answer

ultimately it probably won't qualify for conventional financing. Does the listing also say needs work or thing similar?

Eliott Elias · Answer

1. It won't appraise

2. It won't qualify for conventional

3. They want a quick close

Paul De Luca · Answer

@Christopher Dru

And the seller will prefer a cash offer over a hard money financed offer since there is no financing contingency. Plus you can close more quickly.

Christopher Dru · Answer

Thank you, Taylor - I could see that being the case as the property in question appears distressed.

However, what is the advantage of a seller placing a "cash or hard money only" restriction on a buyer - if my bank or credit union is willing to give me the loan, why would the seller be concerned?

Maybe the seller is certain that traditional financing will not be approved for the property so he/she is essentially "cutting to the chase" and searching for buyers that have guaranteed financing and won't waste their time on prospects with traditional financing getting denied.

Steve Vaughan · Answer

Exactly. Needs work, not bankable, doesn't want or is afraid of inspections and repair requests.

Or still in seller's market la la land like it's still March or April. Not motivated.

Why would a seller specify "cash or hard money only"?

Why would a seller specify "cash or hard money only"?

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