Hard Money vs Cash Offers

3 Replies

I am working a deal. I have pre approval from HML and. all am wondering do I then submit my offer as a cash offer or should it be submitted as a financed offer? What contingencies should be placed on contract other than inspection time frame?

Your cash in a bank account in your name = cash offer. 

Someone else's cash (i.e. HML) that you have to borrow = financed offer.

For financed offers, you should have a loan contingency in the contract. 

Originally posted by @Jason Patrizi :
I am working a deal. I have pre approval from HML and. all am wondering do I then submit my offer as a cash offer or should it be submitted as a financed offer? What contingencies should be placed on contract other than inspection time frame?

 Depends on if you have cash to buy the property. Around here I see a lot of flippers submitting cash offers(and they do have the cash) and then switching to hard money during the escrow process. If it's presented to the seller as a fait accompli, ie "I have final approval from this lender, just need you to agree to modify the offer to reflect the loan",  nobody should have a problem with it. 

If you don't have the cash to buy the property outright, then you should submit your offer with no loan/appraisal contingency if you want to compete with the cash offers, just be sure you can back that up. If the appraisal comes in at 75% of what you expected and the HML offers you a correspondingly smaller loan, you need to have the cash to simply shrug and put more money down.