Why a broker is so concern about the down payment before negotiate the selling price. Even if I am pre qualified for a morgage.

Asked by Shoumick, Valley Stream, NY Tue Sep 21, 2010

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Ian A. Wolf, Agent, Morristown, NJ
Tue Sep 21, 2010
All a buyer has to judge your offer on is price, terms, and financial qualifications. Your down payment speaks significantly about the latter. I have had buyers get lower offers accepted because the deposit was more attractive. If you want the best deal, especially now, a strong deposit is a good trick to look better without it costing you more to purchase. Hope that helps.
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Anna M Brocco, Agent, Williston Park, NY
Tue Sep 21, 2010
Keep in mind that even though you may be pre-qualified, does not necessarily mean that in the end a mortgage will be granted--the broker and seller need to know that you are serious about the purchase; and if in a situation with multiple offers on table, the offer with the best terms usually wins out--trust your agent and let him/her know your amount of downpayment.
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Keith Sorem, Agent, Glendale, CA
Tue Sep 21, 2010
I am primarily a listing agent, so I get to see a lot of offers submitted by buyer's agents.

The truth is that most of them are incomplete, even when I specify exactly what is required.

Your Realtor's job is to make you, the buyer, look as strong as possible. In addition to the points outlined in Bill Eckler's post, I would add the following:
1. Sellers often think that the amount of the down payment is a indication of the strength or seriousness of the buyer. Although this may be not true, nonetheless that is how sellers sometimes think.
2. As a listing agent, I look at the entire offer package. When I write an offer (assuming to an individual, not an REO), I include:
- A pre-approval letter from a direct lender that specifies the property address and the purchase price I am offering. I cannot tell you how many letters I see that specify and amount OVER the purchase offer price...so I know that I have the green light to counter back for more money.
- Proof of down payment and initial deposit funds. - a statement from a financial institution that shows that they have the money (account number deleted)...as close to the amount that you actually need as possible.
- Mention the buyer's credit score in the pre-approval letter OR include page one of the credit report
- The buyer writes a letter explaining why they love the property and how they can see their family celebrating Thanksgiving in the home
- A cover letter from me outlining the sterling qualities of my client and why they deserve the seller's best consideration

A strong offer package will stand out and get not only the seller's attention, but the listing agent's attention. You want the listing agent to say to the seller "this is a complete offer. You need to take this seriously"

And if you are writing an offer below asking price, explain how you came up with that price, document if at all possible.

Good luck
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Joseph Brown, Agent, East Meadow, NY
Tue Sep 21, 2010
It shows the seller and the broker you are a serious buyer.

Joseph Brown
Century 21 American Homes
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Scott Godzyk, Agent, Manchester, NH
Tue Sep 21, 2010
There are 2 parts to a down payment that brokers have to worry about, the first part is the deposit, the deposit is what shows good faith from the buyer to teh seller to get the seller to accept and sign their offer. With abnk owned homes they may have a minimum deposit, if you do not include this minimum deposit, your offer could be rejected.

the second part of down payment is what type of mortgage you are applying for, if yo want a fha say, you will need 3.5% of the sales price and the broker needs to make sure if you have that, if it is a conventional loan, it could be 5 to 10% of the sales price. The broker needs to assess you have the ability to purchase and pay this amount prior to presenting an offer.

Instead of just getting prequailified which is not worth much today, you should get preapprove dby giving your loan officer your tax returns, paystubs, bank statements etc. It iwll help you when it does come time to make an offer and get that mortgage.

please see my blog for info and tips on getting a mortgage
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Bill Eckler, Agent, Venice, FL
Tue Sep 21, 2010
Good sales people understand the importance of conveying the message to sellers that their customer is a "serious buyer!" This is accomplished through several different positions that include:

1. a fair offer price

2. no "off the wall contingencies"

3. cash deal

4. letter of pre-qualification or proof of funds

5. deposit amount

6. quick closing date

We recommend that you carefully consider all of these issues including the deposit prior to making any offer.

Good luck,

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My NC Homes…, Agent, Chapel Hill, NC
Tue Sep 21, 2010
First off, are you working with the listing agent who is representing the Seller or are you working with a Buyer Broker who would be representing your interests?

You should have confidence that your Buyer Broker is looking out for you, if you don’t then you should find another Buyer Broker to work with.

The question of how much you’ll be putting down is something that the Broker needs to know as this amount (typically a percentage of the purchase price) is important as it will indicate to your Broker the type of loan you’re likely getting. Have you shown your Broker the banks pre-qualification letter?

As others have written the pre-qual letter is in no way guaranteeing you a mortgage, that would require a pre-approval letter however it would also require you to pay the mortgage lender their fee (usually around $400+/-). Unless you are prepared to do this, lighten up and trust that your Broker knows what they are doing, and they aren’t trying to give you a hard time.

Finally, if you aren’t using a Buyer Broker, you really should be. Most states allow agents to work both sides of a transaction; this is referred to as “dual agency”. Trust me, you don’t want it, you want someone who’s only concern is you.

Good Luck.
Web Reference:  http://NCHomesbyLarryT.com
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Stephen Maha…, , Valley Stream, NY
Tue Sep 21, 2010
Its a brokers Job to ensure that anyone looking to make a purchase is qualified to do so. While you may be "pre-qualified" it may be for an entirely different set of conditions......."pre qualified" does not mean "pre approved".
Trust in your broker to do their job that they have been trained to do and all will end well..
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Barbara McDe…, Agent, Woodbury, NY
Tue Sep 21, 2010
Good Morning. There are 2 parts to every offer. The offer amount and the financial terms of the offer. In todays market, the financial terms are the most important. You can offer the seller full asking price but if the financials are not strong, your offer is not strong. A preqaulification is not a guarantee that the lender will give you a mortgage. The agent is doing his/her job by asking questions regarding your financials as this is all part of the offer. Remember what the goal is, the closing table.....
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