Rental Property Investor · Potomac, MD · Member since 2016 · 115 posts · 64 votes
To me a "cash offer" doesn't necessarily mean all cash, it simply means that I'm waiving the typical financing contingency clause and also not making the seller pay any portion of points towards a mortgage. It's a move I would consider if my price is low as a way to strengthen my offer and only if I'm very confident in getting financing.
Is this consistent with others views? If not, please enlighten me.
Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
9y
I guess this is the fall out of the elections. Words dont mean anything anymore! Cash means Cash. AS opposed to financed. I bought a house with no finance contingency but with a mortgage. We didnt call it a cash offer but we did say we waive finance contingency. That too has no meaning unless there is a hefty earnest money that you can lose, which in that case there was.
While I don't know about NC, I would think that or something similar would be allowed. As a buyer, by not using a financing contigency you usually are "losing out" on what I call a consumer protection. If the buyer can't secure a mortgage, usually that lets them out of the deal. So, if you don't include a financing contigency, you better be sure that you can get your financing or have the cash on hand to close the deal should the financing fall through.
I hope this helps. Consult a qualified professional. Good luck.
In my experience, its common place for flippers, wholesalers and other industry buffs to attempt to lure sellers into accepting their offers as all cash when the have no intent to close in cash. I don't believe this is generally common place however since most folks are not flippers, wholesalers and other industry buffs.
As a seller, if the offer said 'cash' I would need proof of funds and no financing contingency in order to accept. At the end of the day, if you end up using a hard money loan but still close on time...it would make no difference to me. That said, with a non-experienced seller, consider that most sellers do not sell regularly, the change, mid-to-late escrow can be scary. The non-experienced seller doesn't have faith in the private/hard money lender and believes this will delay in the closing...in some cases it will delay the closing. Further, in some states and with some escrow/title companies, escrow, title, the realtors or some other third party may require the seller to sign an amendment switching the contract from a cash closing to a financing closing. Again, no problem as long as the seller is agreeable to sign...
In some states the standard purchase agreement promulgated by the association of realtors has language in the 'cash' section to indicate that hard money with no financing contingency is the same as cash. In these instances, the seller will not be required to sign an amendment. In other states where the standard purchase agreement does not include such language, on my deals, I tend to write the offer as 'cash' but then write into the contract, usually in the additional terms section, something to the effect that 'buyer has sufficient cash to close as evidenced by the attached proof of funds but reserves the right to use private/hard money financing so long as buyer closes the transaction on or before the close of escrow date referenced in section _____'.
This should help cover the buyer and avoid knee-jerk seller reactions mid-to-late-escrow.
As for a listing stating 'cash offers only, no hard money'...sort of ridiculous and from my perspective the sign of the times in this ultra hot, nationwide, sellers market. At some point this will change and those sellers will begging for private/hard money offers :).