What happen if my cash offer was accepted and I would like to finance the property now?

Question

I am considering using hard money or conventional. by most likely I will be using hard money , since the property is no show, the appraisal can't get inside the property.

Aaron Mazzrillo · Answer

You should send an addendum over to the listing Broker requesting the use of hard money financing. It may not be a deal killer.

If the original offer says 'cash', escrow is not required, and may not be willing to record a trust deed for your lender. Not only that, but if you have a deposit, you could be saying good bye to it if you have already passed your contingency days.

If you are going to write cash offers, but may want the option of using hard money, on Line 11 D of the CA RPA, have the agent representing you write "Buyer reserves the right to use hard money at buyer's option."

It will probably not get you as many deals as a straight cash offer, but at least you won't be in the position you are now if you do get one accepted and don't have the cash.

Aaron Mazzrillo · Answer

I answered your question. Either you are not reading the responses or you don't like my answer so you are hoping someone tells you something different.

I'm a licensed CA RE Broker. You wrote a cash offer. If it were my seller, I'd tell him/her to take your deposit. (if you even put one down???) You need to tell your agent that you don't have the money and you need to send an addendum to the listing agent requesting to use hard money. You better send your pre-approval letter from your hard money lender along with that addendum. Also, if there is a per diem for not closing on time, expect to pay that if you your HM lender can't fund the deal by the time you are scheduled to close.

Aaron Mazzrillo · Answer

This used to fly about 2 years ago, but it is no longer the case. The accepted offer becomes escrow instructions. Escrow will expect the buyer to either wire the funds into escrow or deliver a cashier's check. Since the buyer wrote a cash offer, escrow is not required to prepare and record a trust deed for the buyer's lender. Technically, they are not allowed to do it because it is not in the instructions. Also, who is going to pay for the lender's title policy?

Aaron Mazzrillo · Answer

You should put what I said on line 11 D on all future cash offers you write. It is too late for this current deal. On this one, you need to have your agent send an addendum to the listing agent requesting they accept you getting a hard money loan in lieu of your cash offer.

Ophelia Nicholson · Answer

I'm curious how your cash offer got accepted without you having to show POF/bank statements

Bill Gulley · Answer

I agree with Aaron. On the Addendum, you might make it clear by adding "Buyer waives all financing contingencies, including appraisal".

Adding that on future contracts will make your offer look much stronger, but you better have the loan lined up.

Jeff L. · Answer

Thanks Aaron, I will the agent know that we need the addendum adding an option of using hard money, on Line 11 D of the CA RPA, have the agent representing you write "Buyer reserves the right to use hard money at buyer's option."

Jeff L. · Answer

I don't have enough money, so I have the realtor wrote a cash offer with intention to use hard money to close. my hard money lender already approved the loan. but wonder if it is ok to use the hard money to close the sale due to the original offer was cash. do I need to inform the realtor about it?

Mike G. · Answer

If you can afford to buy the property with cash, you can also refinance with a hard money loan after you purchase the property.

John Newland · Answer

By writing a cash offer, you are simply not utilizing a financing contingency.  As long as the seller gets their check at closing, they could care less about where the money is coming from.  You can fund the transaction with a mortgage/loan, but in the event financing is unavailable and you cannot close, you are risking your earnest money deposit and possibly more.

Hard money is a loan no matter how you slice it, so you probably should have had a financing contingency as a safety net.  If you are being refused the hard money, and you cannot get financing by any other means necessary, you may want to reason with the seller or their agent if one is involved and change the terms of the contract to include a financing contingency or just release you from the contract.  If you cannot close and they will not fully release you from the contract, you should probably contact an attorney, even if it costs more than your deposit and even if you are fine with losing your deposit, because the seller can sue for specific performance.

If you have not put in an offer yet and intend on using hard money, then definitely protect yourself with a financing contingency or at least a provision making the deal contingent upon obtaining a hard money loan with the terms that are acceptable to you.

What happen if my cash offer was accepted and I would like to finance the property now?

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