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I've seen this more and more where people with 20% down or more are the offers taken by the sellers. I'm curious as to why. Let's assume nothing financially looks fishy (solid credit history). The sellers aren't the ones taking the risk of lending. I understand they want to be sure they make it through escrow, but a 20% down doesn't mean that will happen (nor that someone has good credit for the remaning 80%).
I want to buy a home, someday (next few years or less) but I'm not going to have a 20% down, that's for sure. I'm just wondering how many homes I'll lose because I don't have a 20% down, even if my credit history/DTI is "great".
I'd love to hear from the REA's who help the sellers make the decision about which offer to take and why they suggest that.
Thanks!
The cash buyers will be a bigger issue. Since you are looking to buy a first home, then you will likely be competing with investors. 20% down buyers are typically in the move up home price range.
IF by chance the buyer defaults in any way, the seller keeps the deposit. More deposit, more money to keep in a default situation and less likely for the buyer to just walk away.
There are very few sales that fall through, by the buyer just refusing to close the sale, and the deposit is turned over to the seller.
The majority fall through for legitimate reasons backed up with the wording of the contract, and the buyer gets the earnest money deposit back.
Too many people put too much faith in the pre approval letter. It is not really a guarantee that the buyer can get financing. It is just really saying he is qualified to get a loan of some type, but any certain property may not be qualified for him/her to buy if.
The appraisal may be very low, and the seller will not lower the price. The house may fail the inspection, and the seller will not bring it up to acceptable standards. And depending on the contract, there are many other reasons a sale falls through and the buyer gets the deposit back.
As a seller, it gives me a better feeling about the buyers ability to get financing. I care about the deal closing, so I am going to pick the offer that I think is going to get me to closing with the least headaches. This also means that I will pick a conventional loan buyer over FHA or VA, just to avoid the extra requirements.
The cash buyers will be a bigger issue. Since you are looking to buy a first home, then you will likely be competing with investors. 20% down buyers are typically in the move up home price range.
Remember the old saying "All real estate is local?" The "likely be competing with investors" may be true in Salem, Oregon but certainly not true in many areas of the country.
I've never put 20% down on any home of the 4 I've purchased, and I've never had anyone question or balk at my offers. I have solid credit and was easily pre-approved. Once I used the 10-10-80 type deal to avoid PMI. The other times I've used VA financing and put down from 0% to 10%. I think this really only comes into play in cases of multiple offers, when they have to select which offer to take. I've never been in a situation like that. I always was the only offer on the table.
As a seller, it gives me a better feeling about the buyers ability to get financing. I care about the deal closing, so I am going to pick the offer that I think is going to get me to closing with the least headaches. This also means that I will pick a conventional loan buyer over FHA or VA, just to avoid the extra requirements.
With a realtor and lender familiar with VA requirements, if the house is solid, and the buyer's income/credit is fine they can sail right through.
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