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Old 06-07-2018, 09:58 PM
 
1,461 posts, read 331,260 times
Reputation: 1667

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Quote:
Originally Posted by MikeJaquish View Post

And, people with cash for down payment can usually more easily afford to walk away from the transaction.
Cash-strapped buyers with good credit are often very good buyers who commit completely when writing an offer.

Down payment is NOT "skin in the game" to the seller. The seller never receives the down payment, no matter how high, until closing, so it is hardly relevant.
The seller never gets more than EMD and any nonrefundables until closing.
EMD and any nonrefundable deposit are the actual skin in the game.

In NC, I might willingly accept a VA offer with 100% financing where the buyer put up a couple thousand (nonrefundable)DD Fee and another thousand EMD over a cash offer with a lower DD fee and EMD.
That cash buyer is flush and can probably afford to walk away over little or nothing.
Don’t do anything stupid like waive all your contingencies or put $5000 in earnest money on a $100k house. If the seller wants more than 1% in earnest money, they can abuse someone else. The only reason any seller would ask for “skin in the game” is to have their buyers over a barrel, probably to pay for a deadbeat buyer’s sin long ago.
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Old 06-07-2018, 10:33 PM
 
Location: Alaska
222 posts, read 143,801 times
Reputation: 606
We have sold and bought with VA loans. Guess it's no big deal because we're military. We're about to close on a house that we're buying from a couple that used a VA loan and we're using a VA loan.

I'd say it's the experience not necessarily the loan that burns people. Not all VA loan buyers are going to cause an issue anymore than other lenders. I will say that the appraisal is obviously a bigger deal because if you're going in with 0 money down odds are you won't have room to get past a low appraisal other than the seller having to drop the price.

We just got the results of our appraisal for the home we're buying and it came in 3k over so no issues for us. We also put quite a hefty sum in earnest money right from the outset. We did ask for a good chunk in closing costs because our current home is still lingering in a terrible market and God only knows when it'll sell. That was our equity and downpayment and we've already had to lower the price so much we'll most likely get nothing out of it. It's a bitter pill to see 50k in equity disappear as you lower and lower the price. Horrible market where our old home is located. We'd just be happy to have it sell at this point let alone get a dime back at closing.
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Old 06-08-2018, 12:18 AM
 
Location: Honolulu, HI
4,563 posts, read 1,141,729 times
Reputation: 6523
Quote:
Originally Posted by MikeJaquish View Post

And, people with cash for down payment can usually more easily afford to walk away from the transaction.
Cash-strapped buyers with good credit are often very good buyers who commit completely when writing an offer.

Down payment is NOT "skin in the game" to the seller. The seller never receives the down payment, no matter how high, until closing, so it is hardly relevant.
The seller never gets more than EMD and any nonrefundables until closing.
EMD and any nonrefundable deposit are the actual skin in the game.

In NC, I might willingly accept a VA offer with 100% financing where the buyer put up a couple thousand (nonrefundable)DD Fee and another thousand EMD over a cash offer with a lower DD fee and EMD.
That cash buyer is flush and can probably afford to walk away over little or nothing.

Very good and informative post for me, thank you.
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Old 06-08-2018, 02:42 AM
 
Location: Cary, NC
31,593 posts, read 55,307,520 times
Reputation: 30150
Quote:
Originally Posted by ddm2k View Post
Don’t do anything stupid like waive all your contingencies or put $5000 in earnest money on a $100k house. If the seller wants more than 1% in earnest money, they can abuse someone else. The only reason any seller would ask for “skin in the game” is to have their buyers over a barrel, probably to pay for a deadbeat buyer’s sin long ago.
In a market where a habitable $100,000 property will get 8-10 offers in 24 hours, buyers don't get to set the terms.
They have no leverage whatsoever.

The cogent point is:
100% funding via VA, in particular, is a credible and excellent loan product. And, the transactions close sales while supporting service people.
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Old 06-08-2018, 06:35 AM
 
3,962 posts, read 1,593,575 times
Reputation: 12380
Quote:
Originally Posted by desperatedogadvice View Post
We have been lucky with real estate sales. Multiple offers on every home we have ever sold in quick turn around of listing. And as this is the case, we have our pick of buyers. We always look for (in order of preference) 1) full price or over listing cash offer 2) full price or over listing conventional loan with at least 20% down 3) everything else. My husband is very leery of any kind of loan with 0% down.

I got to wondering if this is just a quirk of his or if other sellers also view a no money down loan as a red flag. And really, is that fair to a buyer? How do others view this?
Maybe I don't understand the question entirely. But if the buyer is getting his mortgage from a third party, why do you care?

The only caveat I would have is to make sure your buyer is pre-approved before you'll take an offer. That way you don't pass up other buyers and wind up with a would-be buyer who gets turned down.
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Old 06-08-2018, 07:08 AM
 
Location: SW Florida
9,100 posts, read 3,923,269 times
Reputation: 18770
Quote:
Originally Posted by desperatedogadvice View Post
My husband says that he views people who don't put down a substantial down payment (and earnest money) as "not serious." He has pretty strong opinions as he flipped houses in college and after to help finance post grad education and was burned by a buyer who had a 0% down loan. He blames the lack of skin in the game for some of what happened in that situation (as well as the 2008 financial crisis.)

A loan is a loan is a loan to me as long as we get paid. But when we have had multiple offers the no money down goes to the bottom of the pile.

I bought my house with no money down as it is a VA loan and they back the loan to a certain percentage. You still have to qualify and once you close and you have your money what difference does it make? If they default it won't be your problem at all. Having $0 down doesn't mean there is no interest. Did they put down earnest money?
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Old 06-08-2018, 07:54 AM
 
1,461 posts, read 331,260 times
Reputation: 1667
Quote:
Originally Posted by MikeJaquish View Post
In a market where a habitable $100,000 property will get 8-10 offers in 24 hours, buyers don't get to set the terms.
They have no leverage whatsoever.
If your budget supports it, new construction.

My dream setup since i was 24 was:

-Within reach of city utilities, but not city limits
-Within reach of natural gas, propane is 2-3x the cost
-No subdivision or HOA

And that’s what I bought. It may have been easier in my town of 3,000 that was on the outskirts of a city of 30,000. In 2014, no less.
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Old 06-08-2018, 08:10 AM
 
Location: Pittsburgh, not Paris. #MAGA.
9,693 posts, read 5,275,637 times
Reputation: 9671
I used a VA loan to buy my first condo (put $0 down). The seller was military, too, and bought the place initially with a VA backed loan. While I had money to pay closing costs, I would rather not have and didn't (doing so would've depleted my cash assets at the time). And that would be one of my concern with a VA buyer when I sell my place. Thus, most other things equal, I'd probably prefer not to sell to a VA backed buyer, but I'd only come to such a decision after evaluating all of the offers, etc.
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Old 06-08-2018, 10:38 AM
 
Location: middle tennessee
1,828 posts, read 850,174 times
Reputation: 6487
All my seller wanted was a letter from my bank saying I could get a mortgage, and then a second letter down the line saying I could get a mortgage for the sale price. I was prepared to pay 20% down, but in doing some research on my own, I found a mortgage with 0% down and asked my banker if I could use it. It was not a VA loan.


Worked out fine and I had money to spend fixing up my house. Small downside is that I will have to pay mortgage insurance until I build up some equity, but, in my case, its not much.


I don't think the seller cared (or knew) what kind of mortgage I had.
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Old 06-08-2018, 10:48 AM
 
1,461 posts, read 331,260 times
Reputation: 1667
Quote:
Originally Posted by newcomputer View Post
All my seller wanted was a letter from my bank saying I could get a mortgage, and then a second letter down the line saying I could get a mortgage for the sale price. I was prepared to pay 20% down, but in doing some research on my own, I found a mortgage with 0% down and asked my banker if I could use it. It was not a VA loan.


Worked out fine and I had money to spend fixing up my house. Small downside is that I will have to pay mortgage insurance until I build up some equity, but, in my case, its not much.


I don't think the seller cared (or knew) what kind of mortgage I had.
And that's fine. Some sellers have this power trip "qualifying" buyers to see who is "worthy" of their house even after multiple offers come in above asking. I never thought I'd see this outside of the West coast, but... yep!

And then in their new house, it will be another story at the dinner table when they're entertaining to make them seem "cool" to their new neighbors.
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