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Old 05-16-2021, 12:45 PM
 
Location: Salem, OR
14,833 posts, read 36,137,322 times
Reputation: 14946

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Quote:
Originally Posted by MikeJaquish View Post
This is NOT a "creative financing" question and issue.
It is a contract and integrity issue. OP has the right idea to include contract language that will clarify intent and make a guarantee to close on time.

And, it should be easily resolved with clear language, perhaps an addendum.
AND, with huge nonrefundable money paid to seller at time of contract.

$700,000 contract price.
$100,000-$200,000 non-refundable money directly to the seller. First though, check on the mortgage balance, so the seller can invest that 100 grand in sleek cars, long cigars, fine liquor and fast "company," and still pay off any mortgage balance.

Additionally,
Seller to do no repairs after inspections.
Buyer will pay contract price in full, regardless of appraisal opinion.
Guaranteed to close on time. Will close with a cash purchase if the lender delays, even one day.
Seller may retain possession for a week, two weeks, a month post-closing, if that is desirable to them.

Any or all of that language to be included in an attorney-drafted addendum to any standard contract you are using.
And, don't fully expect to win the day in multiple offer situations. Simple is often better than complex in competitive situations.
This is how you do it. In our contracts writing in cash and then proceeding with a mortgage is financial misrepresentation and a breach of contract. That is easily solved by submitting a proof of funds along with your lender letter that states that you will pay cash for the home if the mortgage process fails due to an appraisal, the buyer, or property qualifying for financing.

I just did that with an investor in January. The rates were too good to pass up so they wanted to try a conventional loan, but waived the appraisal contingency and agreed to pay cash if the property didn't qualify for financing. It did and we closed with a mortgage.

Don't lie about it. Just write it up in an addendum.
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Old 05-16-2021, 12:47 PM
 
Location: El paso,tx
3,843 posts, read 1,579,041 times
Reputation: 7019
Quote:
Originally Posted by Grlzrl View Post
Right. And if they downpayment is big enough, the appraisal isn't an issue anyway.
Well, yes and no. If not a jumbo loan, and 20% dn, good credit, appraisal can be waived (where one isn't even done). If they don't waive appraisal being done, then if it didn't appraise buyer could agree to make up difference. But they would have to pay difference between selling price and appraised value, PLUS their down pmt.
Just wanted to clarify for anyone reading. The dn pmt would not normally be used to make up difference in low appraisal. That would be extra cash needed, plus their dn pmt still.
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Old 05-16-2021, 01:05 PM
 
Location: Cary, NC
37,836 posts, read 65,689,408 times
Reputation: 38246
Quote:
Originally Posted by Silverfall View Post
This is how you do it. In our contracts writing in cash and then proceeding with a mortgage is financial misrepresentation and a breach of contract. That is easily solved by submitting a proof of funds along with your lender letter that states that you will pay cash for the home if the mortgage process fails due to an appraisal, the buyer, or property qualifying for financing.

I just did that with an investor in January. The rates were too good to pass up so they wanted to try a conventional loan, but waived the appraisal contingency and agreed to pay cash if the property didn't qualify for financing. It did and we closed with a mortgage.

Don't lie about it. Just write it up in an addendum.
Actually, in our contracts in NC, the buyer's financing representations are subject to revision by the buyer.
ASSUMING (dangerous territory, I know) that the buyer has made their representation in good faith, IF the lender finds a better deal for them on another loan product, they can switch.
It gets more difficult if the buyer wants to switch to an FHA or VA loan, because the seller cannot be compelled to sign off on the FHA/VA addendum post-contract.

But, to lie about cash to get a contract, then proceed with a plan to borrow? Not copasetic.
Never acceptable to lie.
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Old 05-16-2021, 01:24 PM
 
Location: DFW - Coppell / Las Colinas
37,356 posts, read 41,715,909 times
Reputation: 45654
Quote:
Originally Posted by NORTY FLATZ View Post

So, things like~

No inspection

No pest control report


No seller responsibility are what is most attractive to sellers.
You know why as a Seller I always want a Buyer to do an Inspection and Termite?

Because it's a lawsuit preventer so you can't come back and say Mr Seller did not disclose issues with the house. It removes a lot of the burden off of the Seller and puts it on the Buyer.

Sellers don't have to agree to repairs but they should always want a buyer to have inspections.
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Old 05-16-2021, 01:50 PM
 
Location: Sandy Eggo's North County
3,566 posts, read 1,327,144 times
Reputation: 5036
Quote:
Originally Posted by Rakin View Post
You know why as a Seller I always want a Buyer to do an Inspection and Termite?

Because it's a lawsuit preventer so you can't come back and say Mr Seller did not disclose issues with the house. It removes a lot of the burden off of the Seller and puts it on the Buyer.

Sellers don't have to agree to repairs but they should always want a buyer to have inspections.
Oh, I agree, it's a huge risk for both parties.

But, it's still happening...at least in this area. (You can see my location, above.)

Crazy, I know.
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Old 05-16-2021, 02:32 PM
 
13 posts, read 3,997 times
Reputation: 39
Quote:
Originally Posted by MikeJaquish View Post
Actually, in our contracts in NC, the buyer's financing representations are subject to revision by the buyer.
ASSUMING (dangerous territory, I know) that the buyer has made their representation in good faith, IF the lender finds a better deal for them on another loan product, they can switch.
It gets more difficult if the buyer wants to switch to an FHA or VA loan, because the seller cannot be compelled to sign off on the FHA/VA addendum post-contract.

But, to lie about cash to get a contract, then proceed with a plan to borrow? Not copasetic.
Never acceptable to lie.

Mike - if you had read through, you'd see I never said ANYTHING about lying. Offer would be to guarantee the close via cash, and then try in the interim to get a loan if I could. Should be as good as cash to a seller, no?

Norty/Rakin - that's an interesting thought - never thought of it that way. I lost this recent offer because the other buyer was agreeable to no inspection, and I was not. I even offered the seller a condition that I would not renegotiate based on the inspection (i.e. "no repairs") and the response I got was it was "easier" to not have to have the inspection.

It is certainly happening though- and the crazy part is this was on a 1850s home that the current seller has owned for 40 years, did 2 major additions/renovations. I wasn't willing to not have an inspection on that ...
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Old 05-16-2021, 02:41 PM
 
Location: Cary, NC
37,836 posts, read 65,689,408 times
Reputation: 38246
Quote:
Originally Posted by nyc2pit View Post
Mike - if you had read through, you'd see I never said ANYTHING about lying. Offer would be to guarantee the close via cash, and then try in the interim to get a loan if I could. Should be as good as cash to a seller, no?

Norty/Rakin - that's an interesting thought - never thought of it that way. I lost this recent offer because the other buyer was agreeable to no inspection, and I was not. I even offered the seller a condition that I would not renegotiate based on the inspection (i.e. "no repairs") and the response I got was it was "easier" to not have to have the inspection.

It is certainly happening though- and the crazy part is this was on a 1850s home that the current seller has owned for 40 years, did 2 major additions/renovations. I wasn't willing to not have an inspection on that ...
You already have definitive responses to your question.

Note: My response was directed at Silverfall's input, not anything you said.
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Old 05-16-2021, 03:03 PM
 
Location: DFW - Coppell / Las Colinas
37,356 posts, read 41,715,909 times
Reputation: 45654
Quote:
Originally Posted by nyc2pit View Post
Norty/Rakin - that's an interesting thought - never thought of it that way. I lost this recent offer because the other buyer was agreeable to no inspection, and I was not. I even offered the seller a condition that I would not renegotiate based on the inspection (i.e. "no repairs") and the response I got was it was "easier" to not have to have the inspection.
More RE Lawsuits are over property condition and failure to disclose. Sellers and many of their agents don't realize those inspections protect them and reduce their liability on these issues.

Seller may not know he has extensive termite damage under the house. A simple inspection finds that out. No Inspection could mean a huge lawsuit claiming you never told us about the Termites and the damage.

Matter of fact Judge, they would not let us do an Inspection when we really wanted to.
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Old 05-16-2021, 03:10 PM
 
13 posts, read 3,997 times
Reputation: 39
Quote:
Originally Posted by Rakin View Post
More RE Lawsuits are over property condition and failure to disclose. Sellers and many of their agents don't realize those inspections protect them and reduce their liability on these issues.

Seller may not know he has extensive termite damage under the house. A simple inspection finds that out. No Inspection could mean a huge lawsuit claiming you never told us about the Termites and the damage.

Matter of fact Judge, they would not let us do an Inspection.

Makes sense.

However, hard to have much sympathy for a buyer that agrees to waive inspections to close a deal. There has to be some element of "caveat emptor," no?

Proving the sellers knew about it (or should have known about it) and actively concealed it would be difficult if you decided to waive the inspection to win a bid, IMO. But anyone can sue for anything .... and it still causes much heartburn and time/money to be spent ....
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Old 05-16-2021, 05:44 PM
 
Location: Salem, OR
14,833 posts, read 36,137,322 times
Reputation: 14946
Quote:
Originally Posted by MikeJaquish View Post
Actually, in our contracts in NC, the buyer's financing representations are subject to revision by the buyer.
ASSUMING (dangerous territory, I know) that the buyer has made their representation in good faith, IF the lender finds a better deal for them on another loan product, they can switch.
It gets more difficult if the buyer wants to switch to an FHA or VA loan, because the seller cannot be compelled to sign off on the FHA/VA addendum post-contract.

But, to lie about cash to get a contract, then proceed with a plan to borrow? Not copasetic.
Never acceptable to lie.
Here they can't change loans or the lender without the seller's agreement. It is hard for people that relocate here from other states where they can change lenders after the contract, but here the buyers need to shop lenders beforehand.

That said if someone goes from 10% down to 5% down, sellers don't care and it is an easy change in an addendum.
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