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I have been looking to buy a house for about $120k. There are abundant properties for sale in this price. While house hunting, I suddenly came into an inheritance, so I can now afford a down payment of $50k-$60k.

I think in most situations, the seller of the home will be unconcerned about the source of the money and how much is a loan, as the money will pass through a bank anyway.

Are there situations to look out, such as foreclosure, or certain situations of the sellers, in which this 50% down payment can be a good negotiating tool?

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I think in most situations, the seller of the home will be unconcerned about the source of the money and how much is a loan, as the money will pass through a bank anyway.

You are incorrect in this assumption. The quality of the buyer is very important to the seller. You, as a 50% down buyer, look far more attractive as a buyer that is putting 10% or less down. Also you are less attractive than a cash buyer.

During this mortgage process, the seller must take the home off the market and wait about 40 days to see if sale closes when mortgage approval is necessary. All kinds of things can unhinge the sale and not being approved is just one of them. During that time the seller had to pay property tax, utilities, and possibly a mortgage. If the property was left vacant, there is a higher likelihood of vandalism.

This is why cash buyers can command such good deals. They can say things like: We can close in 5 days, no contingencies. For the right seller, they might be willing to greatly discount the price.

While your position might not be as strong as a cash buyer, it is still very strong. In fact, I would imagine that your credit score will play no factor in getting approved for a mortgage due to the high down payment. The only potential hang up will be your income.

If I was in your situation, I would start the pre-approval process, and disclose your down payment amount to your real estate agent and thus the seller. Once you find the right property I would ask for a discount. Even if your offer comes in less than competing offers, you might win due to your down payment.

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  • I have to disagree. Unless the OP is paying the entire amount in cash, the seller really doesn't care. It is the mortgage lender to whom the amount of the loan and size of downpayment matters. – jamesqf Nov 6 '19 at 17:40

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