Home Buying in Boston>Question Details

Nancy Butter…, Real Estate Pro in Ashland, MA

Buyer is going to purchase with USDA preapproval. Suggestions for writing an offer that will appeal to The seller. Closing costs paid by seller?

Asked by Nancy Butterly, Ashland, MA Mon Jan 6, 2014

$500 $500 for good faith deposit enough?
Appraisal is it like FHA appraisal?
Any input in writing offer greatly appreciated

Help the community by answering this question:


I admit I do not know much about the USDA program, but I often work with VA loan buyers who are purchasing with 100% financing and wanted to share some of the things we have experienced. In a buyers market working with these programs is much easier. As the tide started changing towards a sellers market in our area we were competing against other buyers putting a lot more money down. To help my clients, I advised them to place as much down as possible (up to 3-5% based on listing and competition) as this down payment will likely be returned to them at closing or in any case serve as reserves towards closing costs. In some cases I have asked them to draft a letter as to why they have chosen this program, and in others we have gone as far as pre-scheduling home inspections (for ASAP within a day or two) to show how serious we are about moving forward. I would also ask the loan officer to be ready to field calls regarding the buyer and the program they have chosen to help answer any questions the listing agent or sellers may have if they are unfamiliar with the program. In complex negotiating, and in a sellers market, I try to avoid having the seller pay costs where possible because it's one more aspect you may be competing against. Best of luck!
1 vote Thank Flag Link Mon Jan 6, 2014
Thanks Danielle for your insight. This was what I was looking for - how others approach it. I don't do USDA loans, I am not in an area usually that allows it...but it certainly gives a buyer a chance to be a homeowner as do the VA loans. Far better than paying rent :) Thanks again - Nancy
Flag Mon Jan 6, 2014
Sounds as though you may be representing a buyer if you are asking for suggestions on how to write an offer. If so, I'd would suggest that you do not post any details of a possible deal in a public forum for many reasons..... I would also strongly suggest that you contact your broker so he/she can assist and guide you on how to structure an offer. You may get some general feed back here but only you know the details specific to your customer/client as each one is different and with different circumstances. Best of luck.
1 vote Thank Flag Link Mon Jan 6, 2014
It depends on the circumstances. Is this a new listing in an active market place? Probably won't fly. Has this listing languished on the market with no offers, seller might be willing to work with your buyer.
1 vote Thank Flag Link Mon Jan 6, 2014
The magic sauce to success is communicating to the seller the buyer chooses to use USDA or VA or FHA...and does not HAVE TO USE THEM.
HAVE TO USE, equates to weak, weak contingency filled purchase offer.
A risk adverse seller should kick such offers to the curb immediately.
I know. That sounds harsh. So, how can this reality be sweetened?
Compensate the seller for taking the home off the market for a weak, weak, weak buyer.
That $500 will never be seen by the buyer again EXCEPT as a credit on the closing docs. It's non-refundable.
Nancy, it is important for you to know how the appraisal will come in and provide the seller the assurance this will not become an obstacle. Appraisers are lazy. Give them the correct data for real comparable properties to assure the right outcome. No, I did not say have a value discussion, that's illegal, but I did say make it easy for the appraiser to make the right calculations. You can know this number beforehand. Do your homework.
Remember, the value must cover the piled on closing costs.
Do a bit of research regarding the home to be purchased. Is it a flipper house? Residence with no outstanding mortgage? Estate cash out? Home owner needs equity to start the next chapter of their life? You can calculate the profit the investor is realizing. You also know what the minimal profit margin the investor will accept. Make sure the USDA, appraisal, piled on closing costs do not violate the investor threshold. If it does there will be very little conversation....but if it's a newbie investor type...advantage Nancy.
Finally, how long will it take to close in Farmingham MA? We're on the brink of eight weeks here in FL via the big banks and six weeks with the second tier banks. Time to consult with your peers to get a heads up on the possibility of this becoming an issue. If necessary think along the lines of FLEXIBLE closing date rather than eight weeks or longer from offer acceptance.
As we all know, real estate is not a science.
You are about to engage in the creative arts element of real estate.

Best of success,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, FL
1 vote Thank Flag Link Mon Jan 6, 2014
Framingham is ineligible.
Flag Mon Jan 6, 2014
Full price with a closing at the sellers' convenience within the USDA guidelines.
(You might want to reaffirm the property's USDA status. I was recently informed that the USDA area designations had changed.)

(Please note: when you choose an answer as a Best Answer, or at least give a thumbs up, it helps those who answer questions here.)
1 vote Thank Flag Link Mon Jan 6, 2014
I wouldn't suggest full price unless it's priced well!
Flag Mon Jan 6, 2014
The key in this circumstance when you have 100% financing (similar to VA) is to reassure and make them comfortable with the situation. Have the lender back you up and explain that the buyer is credit worthy even with a no money down loan.
That said, whatever the buyer can do as far as a deposit (any monies they have on hand) should be ok, even $1500 or so I've seen done. With the question on the seller concession to cover cost that would depend on the market and how motivated the seller is. We do USDA loans here at EverBank if you client would like to shop. Just click on my profile for info.
Good Luck!
1 vote Thank Flag Link Mon Jan 6, 2014
USDA is 100% financing program. Do you think the seller will be that into paying the closing costs of the buyer??
1 vote Thank Flag Link Mon Jan 6, 2014
As you are an agent in the area. I wanted to give my thoughts on your question. The first concern of any seller will be the amount at risk. I have see other agents put 3% down at P&S knowing that it is 100% financing and the buyers get those funds back at closing. Problem is most USDA buyers do not have those kinds of funds. Appraisal is similar. Please look me up on linked in for more information about me. Also if you have any questions give me a call. 774-573-0329
Edward Moloney
GMH Mortgage.
0 votes Thank Flag Link Mon Jan 6, 2014
Consult your agent who should be able to guide you given the specific area you are purchasing in.

It is all about terms and conditions. If you are giving terms and conditions that are favorable to the seller with a strong pre-approval then you should be able to put a deal together.

You may have trouble competing with a buyer who can put a sizeable deposit down on the PS. I assume you are not putting down more than $500.
0 votes Thank Flag Link Mon Jan 6, 2014
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