CASH OFFERS AS A INVESTOR AND MORE

[Jonathan Lane]

Hello,

I have been looking into what does "cash" offer mean as an investor and through my research  came up with: "cash" offer can be consider funding that is or has the ability to be liquidated without contingency from a bank; i.e. hard money, private money or your own cash. Is this right? BUT- I spoke with my real estate agent and they mentioned that I could not offer a "cash" offer if the cash is: 

      1) Coming from a third party 

       2) The cash offer has to come from my approved bank account. Is this right?

With all that being said, confusion has set in and I am looking for clarity on: 1) how to go about a "cash" offer as an investor? 2) How do we define what a "cash" offer is?

Connecting to the idea of "cash" offer, does anyone have a legal soft proof of funds letter (pre-approval) that is editable and will work in all 50 states? If not, how can I go about obtaining something like that or can I even obtain a soft proof of funds letter that is editable?

Linked to this post is a soft approval letter- does this work? if not, what needs to be done for it to work? Or again, how can I obtain one that works in all 50 states that is approved by different brokers?

I want to thank you for your time and your guidance on this topic

Soft Proof of Funds Letter

Thanks,

Jon Lane

[Bruce Lynn]

Well...people will probably not like my answer, and I'll probably get hate mail and down votes, but flip it around.   If you are a seller....what does CASH mean to you?   To me it means you have the Green stuff in you hand or in your bank account.  You're not getting it from a friend, a partner, hard money loan, a 3rd party vendor, a gap funder, a family member, or going to go borrow it from someone.   If you come to me and say you want to pay CASH...then I want to see a statement from your bank that shows YOU have the money in your bank, in your savings account TODAY, or you can show me your brokerage account or someplace else YOU have the money.  As Cuba Gooding would say in Jerry Maguire movie.....SHOW ME THE MONEY.

Look at today's environment where a lot of hard money has dried up.  Hard money and private money has restrictions in most cases.  So if you gave me a CASH offer where you really thought or planned to use hard money and you can't close the deal because you don't have the cash to close, then it really wasn't a cash offer.   As a seller, would you consider this fraud?

This is a serious business.  You are working with what is often people's largest investment or their life savings.  If you are working with distressed sellers there can be even more involved.  If you don't close on time and as promised you can really mess people up.  Instead of having cash to move, maybe they get an eviction on their record, or become homeless, or loose all their possessions that get set out on the curb.  All because you wrote a legal contract saying you would pay cash, and now you have a "soft" letter, that is worthless to them.

There is all kind of opportunity.  Be up front.  Do things the right way.  Do it in a way that you would like done to you or a family member or your mother or grandmother.   If you don't have the Cash to really pay green stuff to the seller, then do deals that don't require this.  Start small and build your resources.  Do something to build up a cash stack over the next year or two or three, so that you can do cash deals.  If you don't have cash today, then use financing for deals.   We may soon be back in a situation where Subject 2 deals are a potential, so that might work for you.  

If you are planning to use hard money or private money, then go line that up and when you write offers you want to write them as financed deals....because that is what they are.   This will help keep you out of trouble and potential save you money too.  Now at some point you also may be able to write Cash offers when you have the cash to win the deal and then replace that with financing before closing.  I think that is acceptable as long as you realize and are committing to closing with cash if your financing doesn't work out or work out on time.

Are there "investors" out there that write Cash deals to sellers who don't know any better, try to wholesale the property and then, when they can't back out of the deal and never close because they don't have cash to close or never wanted to "buy" the house?  Sure...they're out there.  Don't be one of those guys.