Real Estate Investor · Friendship Heights, MD · Member since 2011 · 15 posts · 0 votes
I'm seeing 10% EMD required for cash offers on REO. Thoughts? Properties in my area can be pricey. REO flippers, what strategies do you guys use to get around this?
Hard money is NOT cash. Its a loan. Write your offer saying its financed. The EM is typically less. Usually $1000-1500 around here on sub $100K houses.
Be aware that if you pass your contingency deadlines and don't close the bank WILL keep your EM.
If you're making a cash offer, that means you have the cash to purchase the property outright; therefore, you should have no problem putting down 10% of the purchase price in EM.
If you don't have the cash to purchase the property, why are you making a cash offer? Instead, make a financed offer and give a smaller EM amount.
No, since it is REO, there is no assignment of contract for Fannie properties. Therefore, he will have to close on the property, sit on it for the 90 days in the deed restriction, then re-sell; or re-sell within 90 days, but for an amount not more than 1.2 times his purchase price.
Thanks for the replies. You're basically all right, I'd like to wholesale REO's and have as little liability as possible. Of course, I fully intend to find a buyer and close all contracts.
Anyway, I was using "cash" as interchangeable with hard money, which is how I make my offers. Is 10% EMD not required with hard money financing?
Hard money is NOT cash. Its a loan. Write your offer saying its financed. The EM is typically less. Usually $1000-1500 around here on sub $100K houses.
Be aware that if you pass your contingency deadlines and don't close the bank WILL keep your EM.
Thanks for the replies. You're basically all right, I'd like to wholesale REO's and have as little liability as possible. Of course, I fully intend to find a buyer and close all contracts.
This is exactly why they require 10% with cash offers, to make sure that you are legit and can close, and not just "intend" to find a buyer. Once your offer is accepted, they will ask for proof of cash funds anyway. I use private lenders, and have had luck with having it considered cash, but I submit my lender's bank statement with a letter from them stating that I can use the money with no appraisal contingency and that it can be wired with 72 hours notice. I'm not sure if a HML would do this unless you had some history.