My partner and I are working with a Realtor who has helped us locate a bank owned single family home in a good neighborhood that we are looking to flip. The house is generally in good shape with mostly aesthetic updates needed. I estimate the ARV to be $180k based on a good collection of comps, I'm using $172k in my calculations as I want to price it more competitively. We have determined our maximum purchase price to be $115,000, and we plan on asking $100,000 as an initial offer. Our plan is to borrow a majority of the money from a private lender and make a cash offer.
My questions is regarding contingencies in our offer. We want to be sure we have sufficient options for backing out if necessary. I have reviewed the Realtor's offer language and noted it has a back-out contingency based on dissatisfied inspection and on failure to obtain financing approval. Being that we are looking to make a cash offer, the financing opt out is irrelevant. In your opinion, is the option contingent on inspection sufficient or do you recommend adding some additional contingency language? Perhaps contingent on partner approval or something similar? If so, does anyone have an example of this type of language? I greatly appreciate your help and any thoughts you might have.
Financing with a private lender is NOT a cash offer. A cash offer generally requires a POF in Your name. Banks don't accept "partner approval" contingencies. You'll be making a financed offer, so show an approval from your private lender, unless they are willing to put the funds in Your account, prior to your offer. Realize that if your offers is accepted,you'll sign a bank addendum of 10 pages or so that will override most of the terms in your standard purchase agreement.
Thanks for clarifying, Wayne. We ended up submitting an offer with financing through a private lender and are currently waiting to hear back from the bank.
Appreciate your help!
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