Private lendor for personal house

[Charlie Gruber]

All,

Have a friend looking to purchase personal residence in Denver area and he keeps loosing to other all cash offers even when coming in over asking.  He is using a 30 year fixed.  Anyone have experience using a private lender so able to offer all cash on a private residence?  Thanks for help.

-Charlie

[Russell Brazil]

Originally posted by @Charlie Gruber:

@Matt M.thanks for your suggestion.

@Russell Brazil, let me make sure i understand you suggestion.  With an escalation clause you essentially agree to pay $x dollars above next best offer.  So if seller gets a cash offer of $300k you agree to pay $300 + x.  A few questions:
1) How do you know the next best offer isn't just the sellers brother making a ridiculous offer to drive up price?
2) I assume you still have some contingency if total value of cash offer plus escalation gets to expensive?

 1) It is illegal for the listing agent to allow a false offer to drive up the price. They would face severe penalties if they did that. (Fines, loss of license, maybe even jail time as this would constitute mortgage fraud as well as other types of fraud) Is it possible that would happen, yes...however a savy agent usually asks for proof of the other offer.  I ask for the other offer and contact the other agent after I have it under contract to make sure it was a legitimate offer.

2) An escalation clause will have a top end that you determine. Take for example an offer I wrote last week. List price was $249,000. We wrote an offer for asking with an escalation clause going $10,000 above next best offer up to a max of I think it was about $305,000. We still did not get it, but we were pretty close. There was 22 offers on this particular property as is often the case at this price point in my area.  I imagine the next offer we make, the buyer may decide to increase his top number, and possibly up there escalation among to $15,000 above next best offer.