How Will They Finance?
Your first order of business is to find out how they will be paying for the property. Will they pay cash or finance through a lender? Financing through a lender will take a little longer to close because of new rules that lengthen the loan approval process. Since anything can happen in the final hour of a loan approval sometimes a cash offer is much more appealing because they are ready to move now. Just be sure that they can prove that they can cover the costs. If it’s a cash offer you will need a proof of funds letter or an increased down payment. Verify that they have the necessary funds available in an existing account and have a current funds letter or statement that shows they will be able to cover all of the costs at closing. You will still need proof of funds for a lender financed offer, as well as proof that they are depositing funds to an escrow account throughout the process. If you can’t verify their ability to afford the home it may be time to look for another home offer.
How Long before Closing?
You’ll want to get a sense of how long it will take to close on the property as well. If you have a cash offer it will typically only take 7 to 10 days, so if they ask for longer you might want to proceed with caution. It could mean they are having trouble with funding or they have another deal in the works that they are waiting to hear about. Lender financed offers will typically take 30-45 days, and may require extensions for various reasons. Anything can happen in this timeframe so you should be prepared for anything.
What Contingencies do They Have?
The contingencies placed on the inspection and financing can often take a lot of time, money and can even hold up the sale. You need to make sure that you understand them and how they can impact a home offer. You should look to see how far out the contingencies are and where the buyer stands as soon as possible.
Have They Sent Over All the Paperwork?
An agent or buyer that really wants a property will typically send over all of the required paperwork signed and dated fairly quickly. If anything needs to be signed it should be corrected as soon as possible. Today’s digital world allows documents to be signed and sent back in a matter of minutes so if they make you wait a day or more then you should proceed with caution they may not be the right buyer for you.
Putting time and money into flipping a home is just the beginning of your job as an investor. Using these tips you should be able to find the right buyer for your property fairly quickly. Look for the home offer that can afford the home, with short contingencies and is always timely with paperwork and you’ll be well on your way to your next rehab project.