Bank indicates cash offers only

[Matthew Haussmann]

Hello Forums,

I am looking for some input or advice. I am looking at a deal in Pennsylvania. The property is REO, listing at $74,500. The ARV is $110,000 and the house needs a max $22,000 in repairs. My first offer will be $50,000 or less. By the numbers, it should work. My problem is the bank has it listed as a cash only deal. The only reasons for a cash only deal that I'm aware of are if the price is too low for a mortgage (under $25,000 or so around here), or if the damage to the property is so excesive that the bank won't secure a mortgage on the property. I've been in the property and talked to the agent. The issues consist of a leaky roof, need of a bathroom remodel (because of the leaky roof) and the need for a water meter. Beyond that it is all cosmetic. Even factoring maximum cost for the repairs ($10,000 for the roof and $3,000 for the bath, and $5,000 for the water meter, all very high end estimates) I cannot see why the bank would list this as cash only. I have been in similar houses at similar price points with much more damage that were listed as conventional financing. The issue is not the cash purchase, I was planning to use cash anyway. My issue is my fear that I am missing something. Can anyone see anything I might have overlooked?

Thank you for your help.

[Joel Owens]

Start low. Asset managers counter to see how much you will come up. Squeak up a little bit and see how much they move.

Example 74,500 you offer 45k.

They counter 73,000. You counter 46,000. Now the 2nd counter from them will show how motivated the bank is. You have learned they will not take your low offer and they have learned you will not come up to their high listing price. Sometimes they are looking for a sucker and you just have to move on. Explain to the listing broker you can't go higher because the numbers do not work. If they say they have someone else that is already 10k higher or whatever just move on. Sometimes instead of a rehab and flip buyer you are competing against a rehab and hold buyer. They do not have immediate resale costs and exit margins right away so they can buy higher and rent It out for years and will pay a higher price.