How do terms affect which offer a seller selects?

Asked by D Martin, Cornwall, NY Mon Jun 2, 2008

My cousin made an offer of the asking price on a house in the Bronx and the seller selected an offer of less money because they were putting 20% down whereas she was putting 5% down.

Her realtor told her the other offer had better terms. Was it more than the percentage down? Should she inquire more?

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Vince Federi…, , New Jersey
Tue Jun 3, 2008
Hi Dana, your question is a very good one. There are many factors which go into purchasing a home in reference to terms. Most sellers are concerned with the amount of money being used as a downpayment. Although it may be important , there are other issues to consider for example: Initial good faith deposit, it can be $1,000, $5,000, $10,000 plus, Pre-qualification vs Pre-approval, faster mortgage committment, willingness to void inspections, flexible closing date. There are times where it's not all about money, it can be about qualifications or flexability.
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Thomas McGiv…, Agent, Farmingville, NY
Tue Jun 3, 2008

It could be ANY number of variables going on here behind the scenes. Most likely, yes, if your agent knows that the other offer involved more money down which, like Jim said, your agent shouldn't know that specifically - then yes, definitely 20% down = the buyer has money - 5% down = the buyer doesn't have money.
Now if your cousin has the money to put down and he/she is serious, then upping that money down would help - OR - if he doesn't, having a STRONG pre-approval to go with the money down may help.
I don't even show homes to people without them being pre-qualified. Meaning, if they call on a sign or however I come in contact with them, the FIRST thing I inquire about is their pre-qual status. So, if your cousin is making offers and is serious about buying - he/she should definitely have this squared away first.
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Gail Gladsto…, Agent, 11743, NY
Mon Jun 2, 2008
The higher the downpayment, the more the buyer has to lose if they back away.

another issue is that everyone is afraid the buyer will not get a mortgage commitment and the deal will go south. With a higher downpayment, the risk is less for the bank and the chance of the mortgage commitment coming through increases tremendously.

If you were selling the property, which buyer would you go with? I would certainly advise my seller to take less money a "surer" deal.
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Jim Johnson, , 78233
Mon Jun 2, 2008
Normally, the terms of a contract are not available to anyone not involved with the transaction, so I wonder what your source of information is. Assuming that you provided all the info, there would be no difference between offers based solely on the DP. Any number of factors--like required repairs, home owner's warranty, seller contribution to buyer closing costs, the type of loan and other factors--can make a difference. By type of loan, I mean the difference between seller costs for conventional, FHA and VA loans, which are increasingly costly to a seller respectively.

There's no point to your cousin inquiring further. She will find another home.
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