Rental Property Investor · Marlton, NJ · Member since 2014 · 125 posts · 36 votes
Hi BP, I am currently evaluating a property where I know a cash offer is looked upon favorably compared to purchasing with a conventional mortgage. I am in position to make a cash offer this week. Since the process from offer to close could move along very quickly, my concern is missing an important step or two along the way. If my offer is accepted, obviously I need to have the funds ready, get an inspection scheduled, line up homeowners insurance, and establish escrow with a title agency. I am curious what other aspects of the purchase I need to consider? Also, have you learned any valuable lessons in instances where you purchased w/ cash (I am including private money, hard money, and HELOC funds when I say cash)? Thanks in advance.
Real Estate Agent · Cape Coral, FL · Member since 2015 · 167 posts · 89 votes
10y
The two biggest bits of advice I have with a cash purchase is to prepare all your proof of funds ahead of time. Copies of bank statements are good... but if you are buying as an LLC or corporate entity, you'll also need your articles of incorporation showing you (and your cash) are tied to the buying entity.
Line up an inspector quickly or even ask if you can have an inspector at the property before making an offer (then you can write an even stronger offer by minimizing or negating the inspection period!). If the property is wood frame or significantly dated, be sure to line up a termite inspection. Also, some locations require water/well inspections too. Rare... but it can happen.
Lastly, and most importantly, ALWAYS do a walk through before closing. Make time for it no matter what. I've only had one buyer refuse (just couldn't wait to close) and when he got to the house, it had become infested with bees. I mean... 50,000+ bees! An hour earlier, that would have been someone else's problem.
Rental Property Investor · West Bend, WI · Member since 2015 · 931 posts · 598 votes
10y
The biggest issue i see with your plan is, if the Sellers title company is preparing a HUD 1 and you switch to financing, they need the numbers from your banker, and with most REO sellers, they need time for approvals, and dont look kindly at changing it last minute. I agree with @Sarah Ziehr except that a true Cash Buyer can Close as soon as the seller is ready, if we agree today on terms, and you can have title, Deed and a closing statement tomorrow, I can wire money as soon as my bank can send it. I recently closed a HUBZU in 8 days from acceptance. if you are financing, and using the subject property as collateral, you need the valuation, as well as your bankers underwriting, loan policy, mortgage recording ect,
Rental Property Investor · Marlton, NJ · Member since 2014 · 125 posts · 36 votes
10y
Thanks @Sarah Ziehr for your insights! In my initial offer, I offered a $1,000 earnest deposit. The bank countered at $5,000 earnest deposit, and I had no problem accepting that aspect of their counter. The bank accepted my latest monthly statements, which demonstrated I have sufficient funds to close with cash, as proof. In my particular position, I see no reason to hide the specific assets at my disposal from the bank, but I take it not everyone feels this way.
@Steve Babiak, thank you for the link to that other thread. I have a lot of respect for J Scott's accomplishments, and if that approach works for him, it should work for the rest of us. Also a good suggestion about access to the line of credit.
@Scott Schultz, absolutely agree that the quicker one can close, the better off we'll be. Steve & Scott, I can access my HELOC funds immediately if I submit the request through my bank's online teller, but in terms of how quickly they can wire the funds to the title company, that is something I will need to follow up on (but can't imagine how it could take more than 24-48 hours). Thank you Scott for continuing to weigh in on this topic.