How Do You Get a Bank to View HML as Cash?

Question

I found another great short sale deal which I offered asking price. I put down cash and used my Lending Home HML Pre Approval letter as my POF. The selling agent is saying that this doesn't count as cash and says bank will count as a mortgage and deal must be cash only. Lending Home says theyve done numerous deals and have never run into this problem. I'm wondering if this is why I keep losing out to the other offers I've made this year. Can anyone give advice on solutions?

Russell Brazil · Answer

A pre-approval letter is not cash. You may want to go with a small local hard money lender who can provide a screen capture of a bank account to justify a cash offer.

Chris Mason · Answer

Secure the debt by some other property, then you can show the cash in your checking/savings account when you make the offer.

Or open a HELOC with a large limit, secured by some other property. YMMV but if I were selling, I personally would view a HELOC with a $0 balance and $200k limit as the same as cash if your offer were for, say, $180k or less (show me the statement).

If you're already leveraged to the max like many REI folks enjoy constantly being, then you've sacrificed the flexibility to do this for that leveraging.

Sarah Ziehr · Answer

If the home is going to require a cash buyer, then you need to have cash. Have you seen the inside of the property? Banks aren't going to lend on property that is not inhabitable.

Another problem I see is that hard money loans base the loan on the property and then only give you 70% of the value. The bank for the current homeowner is going to want to get fair market value, perhaps a bit under fair market value. If your lender is only going to lend 70% of the value, then its going to be a waste of time to accept your offer because the bank sets the price on a short sale, not the seller.

Has your lender done any local deals? Each market has a way of doing things- I highly recommend working with someone in your market who has a good reputation.

How Do You Get a Bank to View HML as Cash?

How Do You Get a Bank to View HML as Cash?

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