Making profit with a "fix and
flip" property is a great way to make money in real estate. Fixers can be
very hot commodity and attract many potential buyer eager to bid for it.
It is important to understand the concept of all cash offer and the
alternative of no contingency hard money loan by private investor.
All Cash Offer - What does it really means?
On every purchase agreement the seller
demand to know how the buyer is planning to pay for the property. The
ability to secure financing play a major role in the seller decision to
sell a property. When you select the ALL CASH option your chances
to win the property are much higher than selecting any other option.
Even though you represent to to the seller that
you are a cash buyer and need no loan to close you still can place a
loan prior to closing and in almost all cases the seller will not object
to it. This can be done providing only that you do not delay closing and
have the loan 100% approved and that can be accomplished by getting a
private hard money loan.
Short of having "all cash", having
only 30%-40% of the purchase
price will give you fair amount of control and a good chance to be a successful
bidder providing you follow the plan on this page. Some purchases deals can be made with as
little as 25%-15% of the purchase price but they are not easy to close. Doing a FixN'Flip with no cash at all
is very unlikely at this writing (April 2010) however if you have equity in
other properties it can be used in lieu of cash or you can get partner with
cash or equity to help you buy.
Below are your options as written on a purchase
contract. .
Unacceptable options for buying
fixers, will most likely be refused by the seller. Never use
this option on a real fixer.
1) LOAN APPLICATIONS: Within 7 (or )
_________Days After
Acceptance, Buyer shall Deliver to Seller a letter from lender
or loan broker stating that, based on a review of Buyer's
written application and credit report, Buyer is prequalified or
preapproved for any NEW loan specified in 3C above. (If checked,
letter attached.)
(2) LOAN CONTINGENCY: Buyer shall act diligently and in good
faith to obtain the designated loan(s). Obtaining the loan(s)
specified above is a contingency of this Agreement unless
otherwise agreed in writing. Buyer's contractual obligations to
obtain and provide deposit, balance of down payment and closing
costs are not contingencies of this Agreement.
(3) LOAN CONTINGENCY REMOVAL: (i) Within 17
(or )______ Days
After Acceptance, Buyer shall, as specified in paragraph 14, in
writing remove the loan contingency or cancel this Agreement; OR
(ii) (if checked)
the loan contingency shall remain in effect until the designated
loans are funded.
Second best. Use in case that you
cannot show ALL CASH
(4) NO LOAN
CONTINGENCY (If checked): Obtaining any loan specified above is
NOT a contingency of this Agreement. If Buyer does not obtain
the loan and as a result Buyer does not purchase the Property,
Seller may be entitled to Buyer's deposit or other legal
remedies.
I. APPRAISAL CONTINGENCY AND REMOVAL: This
Agreement is (or, if checked,
is NOT) contingent
upon a written appraisal of the Property if checked, Buyer
shall, as specified in paragraph 14B(3), in writing by a
licensed or certified appraiser at no less than the specified
purchase price. If there is a loan contingency, Buyer's removal
of the loan) Days After Acceptance). If there is no loan
contingency, Buyer shall, as specified in paragraph 14B(3), in
writing remove the appraisal contingency or cancel this
Agreement within 17 (or
________Days After
Acceptance. contingency shall be deemed removal of this
appraisal contingency (or, remove the appraisal contingency or
cancel this Agreement within 17 (or_______
) Days After Acceptance, Deliver to Seller written verification
of Buyer's down payment and closing costs. (If checked,
verification attached.)
Best guarantee of successful bidding !
J. ALL CASH
OFFER (If checked): Buyer shall, within 7 (or
________) Days
After Acceptance, Deliver to Seller written verification of
sufficient funds to close this transaction. (If checked,
verification attached.)
