Bronx, NY · Member since 2014 · 117 posts · 33 votes
I put an offer in on a property the other day, the asking price was 360k. I offered 345k with 25% down and a 6 month credit for non paying tenant since eviction courts are closed. Seller countered with he would accept 345k with 30% down and no credit for tenant. I understand the no credit but why would the seller care whether its 25% or 30% down?
Killeen, TX · Member since 2017 · 127 posts · 91 votes
5y
It could be as simple as they need a specific amount of money for something they have already planned for and the difference between what they have planned happening or not may be that additional $17,250 in the down payment. I haven't been successful at an owner finance yet but I would ask the question of do they have anything in particular they need to money for if it's a huge deal for you and see how you can accommodate them.
Killeen, TX · Member since 2017 · 127 posts · 91 votes
5y
It could be as simple as they need a specific amount of money for something they have already planned for and the difference between what they have planned happening or not may be that additional $17,250 in the down payment. I haven't been successful at an owner finance yet but I would ask the question of do they have anything in particular they need to money for if it's a huge deal for you and see how you can accommodate them.
Bronx, NY · Member since 2014 · 117 posts · 33 votes
5y
But this is not owner financed. I am going with a conventional mortgage. Thats why I am confused as to why it would matter. The seller would get the full amount after closing.
Killeen, TX · Member since 2017 · 127 posts · 91 votes
5y
@Jayson Greenblatt totally misread your post, sorry. Yeah, that one makes absolutely no sense then. Please let me know if you figure out the why the why because thats the first I've heard that one.
Investor · Northern New Jersey · Member since 2020 · 94 posts · 96 votes
5y
@Jayson Greenblatt
Is the seller asking you to out up 30% for earnest money?
If so I would be gun shy of that since he is pushing for 5% more that will just go in escrow. I try not to put that much down unless it's a killer steal of a deal and I'm showing them I'm very serious. But normally showing them proof of funds will be fine
Your closing with a conventional loan so I dont get it
I have worked with lenders that do not like seller credits going through escrow, especially when it's a credit to fix something specific. I have seen this with roof issues in particular. A vague seller credit looks too much like a unspecified cash exchange after closing, is how my managing broker phrased it.
Instead the seller adds the equivalent amount of the asking credit into the buyers down payment. You, buyer, could go from a 25% down payment (all your funds) to a 30% down payment (all your same funds, plus seller funds to equal 30%). The downsize is if you need cash you won't get it. That other option would be to stick with the 25% down and decrease your cash portion and have seller pick up the rest to the equivalent amount of the asking credit.
I would ask the listing broker to clarify the wording and see if this, or something similar, is what they meant.
I am a licensed broker in Washington State, other states may have different rules and norms.
Investor · SC NC, VA · Member since 2020 · 1k+ posts · 756 votes
5y
I’ve never had the terms of my mortgage stated in an offer. It’s always contingent on appraisal and financing, but it’s none of their business how much money I have.
Bronx, NY · Member since 2014 · 117 posts · 33 votes
5y
Ok. So everybody seems to be on the same page as me and sees the asking for 30% down irrelevant since its being conventionally financed. Yes, I do have an agent. My response to her was more money down and no contingency sounded like a terrible counter from the seller, she said ok I will let him know. I never heard back.
I would assume Your terms about the tenant were unreasonable to them and that’s why you got the request for the extra down payment .that’s not realistic and the eviction moritorium is just going to be extended anyway into summer . L
Bronx, NY · Member since 2014 · 117 posts · 33 votes
5y
Dennis, I understand them not liking the credit for the tenant. I actually expected them to say no. But the counter of no and higher downpayment just seemed really odd to me.
My guess is similar to what others said-the seller is confusing down payment with deposit. As you've not heard back, it may not matter; but if you do make sure you also get the tenant's security deposit transferred to you. It would have to be a fantastic deal to buy a place where the tenant hasn't paid for 6 months.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y
@Jayson Greenblatt did you turn down their offer or counter back in writing accepting the $345 but keeping down payment at 25%? You could have also countered back with the same $90K down payment, which would have been 26% since the offer price decreased.
It is anyone's guess why they wanted 30%. It could be that they wanted to ensure you had enough cash for closing. Since most lenders would want 25% down payment, they may have thought the extra 5% would cover closing costs.
Maybe a more basic question is why not just agree to the 30%? Assuming you have the money, it is very little added risk and in the end you would get back whatever wasn't needed to close the deal.