Banks No Longer Accepting Cash Offers with Option for Hard Money Lender

 Many real estate investors have been trying to spread out their cash over multiple deals to make it go further. To do this, many of them have been submitting offers as all cash and, once accepted, they’ve been submitting an addendum for a hard money lender. (Lender financing addendum). 

This tactic has been pretty effective, since a hard money lender makes lending decisions based on the property and there are not the same requirements of a bank loan. Most loans provided by a hard money lender can fund in a matter of days, which has allowed these “cash offers” to go through to closing without a hiccup.

However, in recent months, Bank of America and some other banks have caught on to this tactic of making all cash offers disguised as a hard money loan. Bank of America in particular is making it difficult to allow a hard money lender to facilitate a purchase for a real estate investor. 

Now, whether you are a homebuyer trying to get a good deal on a house, or a real estate investor, is it really fair this game banks are playing? I mean, does a homebuyer really have hundreds of thousands of dollars just lying around? No it’s the hedge funds and organized foreign investor groups who are able to come in and flash the cash, not homebuyers. The system is rigged and it’s getting worse. What are your thoughts on this topic? Please share your own experiences with this if you have them.

Posted by Corey Curwick of Private Money Utah on September 13, 2012 - http://privatemoneyutah.com/blog/