Foreclosure in Pacifica>Question Details

Pichie, Home Buyer in Daly City, CA

I have a buyer with excellent credit pre-approved foran FHA 5% down and it seems that realtors are taking only 20% or cash, what's the deal?

Asked by Pichie, Daly City, CA Mon Mar 25, 2013

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The deal is that sellers and their agents tend to like offers with a higher likelihood of completions. FHA is a wonderful program but it is more likely that a buyer with 20% or more down with a conventional loan will have less trouble with an appraisal, making up the shortfall if an appraisal falls short or overcoming other difficulties that may arise during underwriting.

As others have said…don’t give up. That will only assure failure.
0 votes Thank Flag Link Wed Mar 27, 2013
Unfortunately that is a shame what Realtors are doing. 5% down loans and no harder than 20% down loans. If the buyer is qualified the buyer is qualified. The appraisal is no different 5% down conventional vs. 20% down conventional. Cash I understand as that is a faster close. Also, it bugs me that Realtors take conventional loans before VA. There is NO difference in speed or difficulty of close between a VA and 20% down conventional loan. The ONLY difference is a VA loan requires a termite clearance. It is a myth that they are any harder to close or any slower than conventional loans.
0 votes Thank Flag Link Wed Mar 27, 2013
REALTORS do not take offers. Sellers take offers.
Flag Wed Mar 27, 2013
I have heard this from a lot of buyers and it is very frustrating. However you can't really blame the sellers or there agents, they seller is trying to take the best offer available and 20% or cash will trump 5% every time. The only two suggestions I can make is to make offers that are above asking to try and make up for having less down. Or you can wait and try and get more of a down payment so you have a stronger offer.

Zack King
Keller Williams Estates Calabasas
(818) 825-7388
0 votes Thank Flag Link Mon Mar 25, 2013
Hi Pitchie- Yes there is lots of cash out there but it all depends on the terms of your offer. If you are the highest price or have the closing needed by the seller, those things are also important. Really just hang in there and keep trying.
0 votes Thank Flag Link Mon Mar 25, 2013
Sometimes you just have to be in the right place at the right time. Don't give up.
0 votes Thank Flag Link Mon Mar 25, 2013
Thank you Carl and TAP your answers help a lot in terms of keeping the faith.
0 votes Thank Flag Link Mon Mar 25, 2013
Sellers can afford to be VERY fussy right now - which means we have to work even harder to get our clients in escrow. You need to be creative and look for opportunities – find out what the seller wants and try to write to meet the need. I have an FHA in escrow right now – we won out of 30+ offers. It’s not undoable – you just have to be persistent.
0 votes Thank Flag Link Mon Mar 25, 2013
Hi Pichie, while this is very frustrating, it's also very common. The market is very hot with multiple offers so agents and their sellers are opting to go with 20-50% down or all cash buyers where there are no appraisal problems or the buyers are willing to purchase without an appraisal contingency.

Keep networking and knock on some doors if you have to.


0 votes Thank Flag Link Mon Mar 25, 2013
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