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Old 11-05-2010, 11:08 AM
 
Location: Vermont
5,439 posts, read 14,324,626 times
Reputation: 2609

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Hello

we may be making an offer on a place that has multiple offers.

we are getting a mortgage, but are already pre-approved (credit check run, employment verified etc... not just pre-qualified). We have no concern about getting a mortgage. Will it be helpful (from the sellers eyes) to not use this mortgage contigency clause?

If we chose not to use it, is there any reason to still provide them with our pre-approval letter... credit scores, etc.
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Old 11-05-2010, 11:40 AM
 
Location: NJ
17,579 posts, read 38,288,152 times
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What would happen if you went forward and for some crazy reason you didn't get the mortgage and were therefore unable to pay for the house? I'm guessing the sellers could sue you for breach of contract
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Old 11-05-2010, 11:43 AM
 
Location: Lead/Deadwood, SD
948 posts, read 2,266,537 times
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Sellers usually want to know how your buying their house before they put it under contract - I think they would be suspicious if you didn't have some sort of loan status letter or proof of cash. Properties under contract (sale pending) are more difficult for sellers to market, so I can't imagine them not wanting some proof of your potential ability to perform. It is expected that when your name is on the ballot that you will vote for yourself, but it usually takes a bit more than that for most people to vote for you as well.

Also if some last minute title glich or issue with the area, change in loan program your using, layoff at work occurs or bank failure/collapse/acquisition occurs the seller may choose to attempt to sue you and if you try to say, "but the bank won't fund" I'm not sure what your defense would be.
Talk to your agent - if not comfortable consult a lawyer.

Last edited by eric#1; 11-05-2010 at 11:56 AM.. Reason: added last paragraph
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Old 11-05-2010, 12:06 PM
 
Location: Lakewood Ranch, FL
5,113 posts, read 7,639,834 times
Reputation: 5990
If you need a mortgage to purchase the property and your offer states that you don't, you are lying and that is a good enough reason to not do it.
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Old 11-05-2010, 12:14 PM
 
Location: Lead/Deadwood, SD
948 posts, read 2,266,537 times
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Quote:
Originally Posted by bbronston View Post
If you need a mortgage to purchase the property and your offer states that you don't, you are lying and that is a good enough reason to not do it.
There are parts of a contract that can be left blank, crossed out, or filled in NA. Unless they specifically say "we don't need a mortgage" - and the seller doesn't care (which I can't imagine why) I fail to see a lie - IMO it would just a naive lack of concern on how the funding will occur.
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Old 11-05-2010, 12:15 PM
 
Location: Vermont
5,439 posts, read 14,324,626 times
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I think maybe this came out incorrectly.

We don't need a mortgage, we are choosing to obtain one.

The point of not using the contingency was to inspire confidence that the deal will go through by telling them that we don't NEED a mortgage, and therefore do not need to make the offer contingent on obtaining funding, not to suggest that I am an idiot or a liar.

Making an offer contingent on getting a mortgage and choosing using a mortgage are 2 different things. I don't know if these are seen as 2 different things in the realm of making offers. I would like to use a mortgage but if I were unable to obtain a mortgage it would not prevent the deal from going through, therefore it is not contingent on obtaining one.

I am happy to provide both proof of funds and/or pre-approval .

Perhaps it is better to use the contigency and proof of funds and pre-approval to inspire the confidence.

Last edited by joe moving; 11-05-2010 at 12:30 PM..
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Old 11-05-2010, 12:15 PM
 
Location: Salem, OR
13,740 posts, read 31,550,338 times
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Quote:
Originally Posted by bbronston View Post
If you need a mortgage to purchase the property and your offer states that you don't, you are lying and that is a good enough reason to not do it.

This is what I was going to say. Most contracts require that you represent where your funds to close are going to come from. If you say cash, but are really taking out a mortgage you are misrepresenting your finances which is material to the contract.

I appreciate your desire to be competitive, but don't commit fraud in the process.
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Old 11-05-2010, 12:39 PM
 
Location: Lakewood Ranch, FL
5,113 posts, read 7,639,834 times
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Yes, I was thinking in terms of Florida. Our purchase contracts (those provided by the Florida Association of Realtors and the Florida Bar) provide a check box choice...cash or financing...and I approached your question from that point of view. If you can actually purchase the home without a mortgage, you are not misrepresenting anything and your offer (especially these days) is a stronger one all other things being equal.
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Old 11-05-2010, 12:40 PM
 
Location: Pomona
1,955 posts, read 9,197,283 times
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I think you'll be in a much better position if you were more forthcoming with your information and leave the contingency in place, not less and without it.

The seller has choices, and their best choice is going to be the highest offer with the best chances of following through.

- Is your offer inline with what comps are for the property? If so, you're in a stronger position. Too low, they'll feel like they're wasting time; too high (but still with an appraisal contingency), and they may think you're just playing games.
- You're pre-approved ... what's your intended LTV? The lower, the stronger you are in the perspective of the seller.
- Earnest money deposit? None of that 1% stuff - go in with at least 3-5% deposit, if not more, even. That shows you're serious, and more to the point, that with that much at risk you're highly unlikely to back out and forfeit it for some ludicrous reason like "oh, that floor has a tiny stain, so I don't want it anymore."
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Old 11-05-2010, 02:18 PM
 
Location: Austin
7,077 posts, read 16,885,085 times
Reputation: 9484
In the Texas contracts, you can say you're obtaining financing and still have the entire contract not contingent upon financing (except for FHA or VA). That means that if your financing falls through and you decide not to pay cash, you lose your earnest money, whereas if it's contingent, you would retain your earnest money.

I would NOT recommend writing the offer as cash and then turning around and trying to obtain financing and just saying you'll still close if the financing doesn't come through in time. You need to let them know you're trying for financing, but you're not making the contract contingent upon it.
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