Cash offer--THEN private lender?

[Vonetta Booker]

I have cash available for a property I want to make an offer on--however, I'd rather not tie up all that money if at all possible, and I also have a private lender willing to finance the purchase & rehab.  

Is it possible to make an initial REO offer using cash (i.e. showing a bank statement POF) to make the offer more attractive--but then having private lending in place by closing?

[J Scott]

In some cases, yes.  In some cases, you might have some hoops to jump through.

Here are a few thoughts:

- Almost all REO contracts will prohibit you switching financing options in the middle of the transaction.

- You can typically choose to use your own closing agent for an REO closing (though the bank will no longer pay for title costs if you do). But, one of the advantages of using your own closing agent is that they can facilitate your change in financing without the bank knowing (if they're willing to do that).

-  If the bank catches you and if there is a clause in the addendum that prohibits the change, you may need to close with cash and/or face a stink by the bank.

-  If you're going to switch to private money, I'd try to make the paperwork as simple as possible and ensure that there is nothing the bank needs to sign as part of the closing (they'll likely see it if it's part of the entire closing package, though).