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It just shows that you can easily afford the house and your lending would be a breeze. Sometimes the lender won't even do appraisals with that amount down. Local lenders here will waive the appraisal.
You are focusing on the details of the lending side of things. Your agent is trying to get you to focus on the psychology of the negotiation, which may or may not have anything to do with reality. 50% down sounds more financially solid to a a seller than a buyer with 10% or 20% down. Your agent is going for an emotional reaction to the numbers.
Does that make sense?
This should be repeated to OP. A 50% down payment means you are a solid buyer. If there is an Appraisal issue, it won't be an issue for you.
Many appreciating markets are still having appraisal problems.
It doesn't matter to the seller how much you put down. He's going to get his money anyway, you're not giving him the down payment. The only reason it would matter is to whomever your getting the mortgage from, it could mean you'd get a better rate.
It doesn't matter to the seller how much you put down.
It does matter in multiple offer situations. The OP is in "a competitive market" ie, multiple offers are common. His agent is trying to help him win a bidding war and yes if two offers were similar, most sellers would take the 50% down buyer over the 20% down buyer because they appear to be a more solid buyer and can weather any appraisal issues.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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I'm not sure I like the "50% down, but actually going to close with 20%" aspect. On second thought, not only am I sure I don't like it, it positively stinks.
So much for ethics.
IN the 15 minutes since I posted this, I've found myself even more enraged at the agent representing the OP. Perhaps he is one of those Realtors who has a code of ethics I've heard so much about.
The only way to be "more attractive" to a seller is to have a pre-approved loan amount for your mortgage at the bank, or to have 100% cash in hand.
As a seller, I could not care less what your down payment is going to be. Frankly I don't want to hear about it at all. That's not my concern. The only thing I AM concerned about is whether or not you get a loan or are making a serious offer. If you are pre-approved for a loan amount that will cover the purchase of my property - that counts for something.
The other thing is whether or not you have the earnest money to go along with your offer. I don't know what earnest money amounts are these days so I won't comment on reasonable amounts - but as the seller I want some earnest money from you before I accept your offer and refuse other offers. As the buyer you should make sure that you can get your earnest money back (it should be held in escrow) in case you don't get the loan or the house doesn't pass inspection.
Also, as a buyer - there is no way I'd agree to sign a contract that had any kind of clause in it about what my down payment might be. That's between me and the lending institution. I would certainly not even consider claiming something I already knew I had no intention of doing.
You will still pay 100% of the purchase price. How much is down and how much is financed is between you and your lender, not between you and the seller. If your lender is balking, a larger down may help you secure the loan, because the lender will have more security.
If it's a competitive market, short of paying more, putting up more of an earnest money or zero contingencies, showing that much more down, may as someone said, get you to the front of the line. You will need a lender letter to support that it's actually possible....but your agent is correct, you can pull a Lucy van Pelt (from Peanuts) and pull the proverbial football up and close with 20% down. I'm not a fan of the approach, but I am asked frequently to issue the approval that doesn't match the ultimate closed loan. That letter doesn't get issued unless they can actually perform under those terms.
The only way to be "more attractive" to a seller is to have a pre-approved loan amount for your mortgage at the bank, or to have 100% cash in hand.
As a seller, I could not care less what your down payment is going to be. Frankly I don't want to hear about it at all. That's not my concern. The only thing I AM concerned about is whether or not you get a loan or are making a serious offer. If you are pre-approved for a loan amount that will cover the purchase of my property - that counts for something.
The other thing is whether or not you have the earnest money to go along with your offer. I don't know what earnest money amounts are these days so I won't comment on reasonable amounts - but as the seller I want some earnest money from you before I accept your offer and refuse other offers. As the buyer you should make sure that you can get your earnest money back (it should be held in escrow) in case you don't get the loan or the house doesn't pass inspection.
Also, as a buyer - there is no way I'd agree to sign a contract that had any kind of clause in it about what my down payment might be. That's between me and the lending institution. I would certainly not even consider claiming something I already knew I had no intention of doing.
Quote:
Originally Posted by Larry Caldwell
You will still pay 100% of the purchase price. How much is down and how much is financed is between you and your lender, not between you and the seller. If your lender is balking, a larger down may help you secure the loan, because the lender will have more security.
You are both 100% correct, the down payment is irrelevant
to the seller.
I understand the psychology of the gambit -- however, I sure wouldn't want to play this game unless I could show proof of funds that I DID have 50% in the bank. People change their financing all the time -- from 30 to 15 years, they change the interest rate, they change the down payment . . . etc., etc. I guess the point is -- if you COULD put 50% down, then there's nothing wrong with saying so. If you couldn't then it's just a bald-faced lie to try to influence the decision of the seller, and that's wrong.
If I were the seller's agent, I'd want to see a proof of funds. :-)
You are both 100% correct, the down payment is irrelevant
to the seller.
A seller, with two offers in front of them, one at 50% and one at 10-20%, might put more emphasis on the larger down payment offer (all other terms being similar). A seller cannot tell, from names on a piece of paper, who the better chance of making it to closing is, but they may be drawn to the larger downpayment..
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