I read a question, posted online, recently, where a buyer said that they were looking at making a cash offer on a bank-owned foreclosure. Specifically, they were wondering whether a bank would take a cash offer for less than the listed price.  For the purposes of this post, let’s assume that they mean “will the bank take far less than the asking price if I’m paying in cash?“

The answer is that the bank might … or they might not.  I’ve seen competing situations where sellers have taken less money for cash offers, and I’ve seen other situations where an offer with a financing contingency eventually won because other terms made it more attractive.  So the short answer is no one knows.  The long answer is that if you’re making a cash offer on a foreclosure (also considered an REO (Real Estate Owned) or bank property), consider:

• your source of funds – every bank will require proof that the money, the cash, is available to you.  This could be as simple as a letter from your bank stating that you have a line of credit of $X available to you, or it could be as complicated as notarized copies of the fund accounts from which the money will be pulled.  Every REO is different, and so you – and your agent – will need to know that information before submitting an offer.
• inspections – most banks will not allow repairs to be made as a result of inspections, but do not let this stop you from doing a home inspection!  As a buyer, you have a right to do the inspections you need to do in order to be satisfied with the purchase, but since the bank has never lived in the house (and if they’re being foreclosed on their own property you probably don’t want to be doing business with them anyway!), they can’t/won’t disclose potential problems and make sufficient repairs.  You’re still entitled to the inspection, if you so choose, but the bank isn’t required to make repairs, so factor that in to the equation when making your offer.  In order to be successful, the intent and timeframe of any such inspections should be clear and reasonably swift.
• the closing date – your closing date is also important, obviously, because it tells the bank how long they’ll need to “carry” the home and any related expenses.  Most cash offers can close quickly, even in two weeks or less, but be sure to leave yourself enough time to allow everything (deed transfer, document preparation, etc.) to happen.

Does cash get you in the game?  Absolutely.  But it’s not the only thing you’ll need to be successful.