How to Make a Cash Offer on a Home That Needs Work
A home is likely the biggest purchase you’ll ever make. If you don’t want to carry a mortgage, you’ll have to have a large chunk of cash on hand. However, you can save on the cash purchase of a home by making an offer on a home that needs work. After all, the homeowners are likely aware of the necessary work and are prepared to accept less than their asking price.
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Instructions
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Let the homeowners know that you’re a cash buyer. This makes you more attractive to them because they know that the sale can go through more quickly with a cash buyer than with someone taking out a mortgage. And there’s no chance of the sale falling through because your financing falls through.
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Take stock of the property. Find out everything that needs to be fixed or replaced. Get an estimate from a local contractor or handyman to find out how much it would take to do all the needed work.
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Ask your real estate agent for a comparative market analysis. Real estate agents offer this service free of charge. They look at other, similar homes in similar conditions that have sold recently in the same area as the home you want to purchase to find out the average selling price. Compare this to the asking price on the home you’re considering.
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Deduct the cost of the necessary work from the comparative market analysis average — or the asking price if that is lower than the average — to come up with a reasonable price to offer.
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Ask your real estate agent to help you submit an offer in writing. Your real estate agent will provide you with a form where you can fill in how much you’re offering, when you propose to close on the home and the fact that you bring cash to the table. Once completed, the real estate agent will submit it to the sellers’ agent for you.
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Submit an “earnest money” deposit” This cash deposit demonstrates your “good faith” to follow through on your offer, if it’s accepted.
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