Making cash offers sight unseen and backing out

[NA N.]

Hello Folks! I have been gone for a while, glad to be back.

Please, if you could give your opinion or advise on the following question, I will greatly appreciate it.

I have decided to start making offers on REOs without seeing them.
This way I will be making more offers and increasing my chances. There is too much competition, prices are way to high for investors and almost every REO I see has multiple offers. I can't keep looking at these homes and wasting the whole day for them not to accept my offers. I just need to change strategy.

My primary concern is if your offer gets accepted and after you look at the house you realize it won't work for you, do you HAVE to pay a Home inspector in order to get an official "inspection report" to walk away from the contract?

Or what excuse are you using for backing out?
Home inspections can get costly in my area, so if you are using another way, please let me know.

Also, on 80K homes, what amount of earnest money are you usually offering on your contracts that you know make a difference in how the bank sees and prefers your offer and how fast are the banks requiring that money in their office these days?

That's it for now.. thank for the input!

BEst

[J Scott]

The inspection contingency will vary from state to state and contract to contract. Where I live, the standard contract allows you to back out of the deal for any reason within the due diligence period (the contract is actually an option contract during that time). In Wisconsin where I invest as well, you would need to have an inspection and find something wrong with a major system or the mechanicals (don't remember exactly how it reads).

So, you'll want to check your state contract to be certain what the parameters are.

In terms of earnest money, if you're making a cash offer, expect to put 10% down in earnest money; this is what many banks require and is pretty standard for cash offers. If you're submitting a financed offer, $1000 is pretty typical, but sometimes you can go as low as $500.

These are good questions for your agent, btw...