Buying off MLS using private money / hard money

[David Stone]

I am putting in an offer on a property listed on the MLS. The property is bank owned. If I am planning on using hard money or private money to fund the deal, how should the contract be written up?

Is this written up as a cash offer or an offer with a contingency that needs to be put in specifically for obtaining a money partner/hard money lender approval?

If anyone has experience with purchasing MLS deals and using hard money / private money to fund the project, I am open to your input! I am using a RE broker, but am trying to get a better understanding of the structuring before I go in...

Thanks!

[Sam J Mrofcza]

@David Stone I am not 100% sure how it works in your area but In Illinois we use a standard contract, known as the 6.1 Sales contract.  There is a section in here to fill out for cash offers.  A typical contract will be dependent on financing, also refereed to as a Mortgage Contingency.  This basically says that unless you get approved the deal is off.  So when its a cash deal there are two options on our contract, one is for a straight cash deal, the other is still a cash deal but it gives you (the buyer) the option to still get a mortgage.  Basically you're saying to the seller that the contract is not contingent on financing but you still have the option to try and get a mortgage if that is what you choose.  In either case here you are not allowed to hold the deal up due to financing issues.    

When I make cash offers ( I use a private lender as well) I always choose the second option.  If you take a look at the link I added above the Mortgage contingency is paragraph 8 and for cash offers you leave paragraph 8 blank and fill out paragraph 36, oh which I always use paragraph 36 b.  You need to talk to your lender and be absolutely certain of their terms and requirements. 

My advice is to make as many offers as you can, your agent might not like it, and you might go through a couple of them in the process but this is a contact sport, and the numbers matter.  

Good Luck!!!