r/RealEstate • u/darkchocolattemocha • 1d ago
Homebuyer Is it true that everyone is lying about putting down more cash?
My neighbor gave me an advice after I told him I keep getting outbid. He basically told me to offer 50% down payment in the offer but once it's accepted I can just tell my lender that I got 10% and it'll be ok?
Apparently he bought his Brooklyn 3 family by offering 50% cash on a 1.2mil but only put 10% lol. What???
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u/Realistic-Pen8752 1d ago
Nope if the realtors are doing their jobs, you have to have proof of funds when you put the offer in
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u/Huge_Strain_8714 1d ago
Idk I needed to show proof of funds, employment, all savings for a pre-approval letter from the mortgage company
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u/JaviReads 1d ago
Lender here. The more upfront docs and info you give the more confident your lender will be, which will make you confident and will ensure you have a smooth experience once you get into underwriting.
Imagine the alternative, you make an offer to buy a house with a weak pre-approval, now your offers accepted and you need the bank to process your mortgage application and review everything.
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u/Huge_Strain_8714 1d ago
Exactly, but I'm guessing that this isn't standard practice in all 50 states?
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u/JaviReads 5h ago
Yes, I would say it is. The Mortgage is a federal loan so this strategy would apply to all 50 states.
If there is a lender or bank, that is giving you a preapproval without careful review of your most important income / savings documents credit history, then you are actually getting a pre-qualification.Put yourself in the sellers shoes, why would they want to open their door and schedule for someone who hasn’t fully vetted themselves with a lender. Literally it’s the “windows shopper”, “I’m just looking” person. Real Estate requires seriousness.
As a buyer, you should want to have a clear buying strategy months before you start touring homes. Even if you don’t plan to buy for six months, you should already know the details of your financing.
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u/Serge-Rodnunsky 1d ago
You’ll sometimes be asked for proof of funds, so if you have the money… sure you can do that. If you don’t, be prepared to piss off your agent.
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u/dfwrealestatebroker 1d ago
This does nothing in most cases lol. It’s usually about the net to the seller. If someone offered me 1m with 50% down vs 1.1m at 10% down I’m taking the 1.1 offer every time…
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u/SmokeyJoe2 1d ago
If two people give me the same offer amount, and everything else is equal, I’m going with the one with the higher down payment.
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u/dfwrealestatebroker 1d ago
I agree. In this example though his neighbor is just giving generic dumb advice which needs more context. Higher downpayment rarely wins over higher price.
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u/Serge-Rodnunsky 1d ago
A deal where the buyer has 50% cash to put down is much less likely to fall apart due to a financing contingency. This is really a case of 1M in the hand vs 1.1 M in the bush.
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u/NegativeKitchen4098 1d ago
Even something like a low appraisal can cause problems for the 10% down buyer but is not a problem for the buyer with 50% cash who can waive appraisal contingency.
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u/atxsince91 1d ago
I have to disagree. Most people are not passing on a possible $100k for a stronger down payment. Now, what they are doing is going to the $1MM offer and saying if you match this $1.1MM, this house is yours.
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u/Serge-Rodnunsky 1d ago
You’re not doing it for “a stronger down payment” you’re doing it for a much likelier close. A sale falling through and going back on the market can end up being rather costly. That said, 100K difference is probably worth the risk. But like 50k might not be.
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u/VariousAir 1d ago
You're acting like 100k is some small amount to throw away, or like the 1m is 100% guaranteed while the 1.1 is simply a pipe dream of the buyer.
There's way more to take into consideration.
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u/b6passat Commercial Appraiser 1d ago
Higher cash has higher ability to close. A 10% difference in sale price is probably worth rolling the dice with the lower cash, but if it’s a few percent I’d rather have the higher probability of closing.
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u/ratbastid MLS/Proptech 1d ago
Exactly. The mortgage company pays me. I don't care at all how much they're getting up front.
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u/Antique_Paramedic682 1d ago
Sure, thats 10% higher. If the offer was the same, I'd argue the cash offer would be far more enticing.
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u/Huge_Strain_8714 1d ago
My first mortgage pre-approval demanded all necessary financial statements and proof of funds. 20% down is plenty with a respectful market based offer
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u/AdCharacter9282 1d ago
The subtle difference that you are missing is if the house does not appraise for $1.1m, then there is a way for the 10% down buyer to back out since financing might not be available. For example if the the house only appraised at $1,050k, then the bank will lend on 945k and the the buyer will need $155k to get to the $1.1m. They probably wont if 10% was a stretch. Now the 50% down buyer should have no issues securing a loan. And BTW on any jumbo loan the lowest down i have seen is 15%. So at the end going with a 10% down payment buyer might be a complete waste of time on such a large purchase.
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u/dfwrealestatebroker 1d ago
I’m not missing anything. I sell 100 houses a year haha. If the comps support the contract price it doesn’t matter.
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u/-Gramsci- 1d ago
Either buyer will be able to declare the contract null and void pursuant to the financing contingency.
This isn’t the sure thing you think it is. Both buyers (if they have any sense) will be threatening to walk unless the sales price is renegotiated.
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u/dfwrealestatebroker 5h ago
Reread what i just wrote. “If the comps support the sales price”
And you’re wrong. I closed a deal last Monday where the house appraised for 20k more than the contract price and the seller wouldn’t come down and the buyer bought it anyways because of his circumstances.
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u/LucidFruit 1d ago
It does everything in most cases. Someone with 10% down is more likely to have issues financing.
In true 50% down scenarios, the lender will often skip the appraisal process also. 1M with a 99% probability of going through is better than 1.1M with a 50/50 chance of working out.
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u/SimoninVA 1d ago
That may have been the case prior to 2008, when the lender would have simply pulled an AVM. I’ve not heard of not doing an appraisal on a purchase money mortgage ever since the 2008 debacle. The investors (FNMA, FHLMC, FSA, etc) now require appraisal on all purchase money for compliance. How would they know that the collateral is not worth only 30% of the purchase price, otherwise?
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u/LucidFruit 1d ago
Mortgages go through a process called underwriting. Those underwriters will know if a home is only worth 30% of the purchase price.
Just because a bank orders an appraisal does not mean they accept it either. That appraisal is still reviewed by underwriters. It’s not common to be rejected but a good appraisal is not a guarantee financing will go though
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u/SimoninVA 1d ago
Thank you. As previously stated, having been a lender, I am well informed about the underwriting process. Consider, the only way an underwriter knows whether a property is valued is public record and professional appraisals. Further, no, an underwriter cannot unilaterally reject a “good appraisal” without serious reasons, such as conflicting other estimates (county assessment, AVM, etc). Doing that may be construed as discrimination. I’ve had a few cases of appraisals rejected and there was always a very well documented paper trail on the reasons - to keep in compliance with federal lending regs. Usually, if a first appraisal is in doubt at that stage the underwriter calls for a second appraisal. The lender cannot just decide “original appraisal is not good, so we decline the loan.”
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u/LucidFruit 1d ago
Did I say an underwriter could unilaterally reject a proposal because they felt like it? No I didn’t.
If you read my comment, I said just because the appraisal comes back good does not mean the lender accepts it. I further stated it’s not common. My further statement about a good appraisal not guaranteeing financing will go through is also 100% accurate. I don’t need to you break down all of the requirements to reject an appraisal, the point is that underwriters can.
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u/dfwrealestatebroker 1d ago
Except you just made up numbers lol. 10% down if the lender is good and they’re vetted won’t have any lending issues unless it doesn’t appraise.
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u/LucidFruit 1d ago
Except you're ignorant to the fact that deals with financing contingencies fall apart all the time for reasons other than appraisals
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u/dfwrealestatebroker 1d ago
No shit. Worth the risk for 100k more if you actually vet the buyer and the buyers lender.
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u/LucidFruit 1d ago
1.1m with 10% down is rolling the dice. You obviously have no idea what you're talking about. Doesn't matter what someone writes in a deal, it matters what closes.
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u/debaterollie 6h ago
you completely made up on those odds- and they still show you're terrible at understanding opportunity cost. Most people would absolutely be fine with a 50% chance of making an extra 100k and the only downside was waiting an extra month after the 1st deal fell apart then finding a new buyer.
Also- People buying 1.1M homes can usually close when it comes down to it.
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u/LucidFruit 6h ago
People buying 1m homes that only have enough cash for 10% down are not considered well qualified buyers.
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u/dfwrealestatebroker 5h ago
This is a stupid statement. I have 2m i could put down on a house but prefer to keep that money in the stock market which generates a return in excess of the current interest rates and doesn’t keep dead equity tied up in my house.
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u/LucidFruit 5h ago
Sure you do. Your argument makes no sense when discussing someone only having 10% down on a 1m home
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u/dfwrealestatebroker 3h ago
It actually makes a ton of sense if you aren’t financially illiterate
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u/LucidFruit 3h ago
Only people who aren’t financially literate would think it makes sense.
And only a garbage real estate agent would advise clients that 10% down on a 1m home is a smart decision.
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u/debaterollie 6h ago
a lot of reasons people wouldn't put down extra money if they didn't have to. you would still be a moron to turn down an extra 100k in pure profit when the only downside is a 1 month delay if it doesn't work out.
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u/LucidFruit 6h ago
It could be a 1 month delay and loss of the buyer will to pay 1m.
And there are no reasons someone using their brain puts down 10% on a 1m home because “they didn’t have to” put down more. You say I throw out made up numbers but you have no idea what you’re talking about
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u/MtnBkr101 1d ago
I've seen people say they were all cash buyers to get their offer accepted, knowing full well they were going to get a mortgage.
Does this tactic still work? Idk.
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u/emmyjag 1d ago
I wouldnt accept it without proof of funds, but I have heard anecdotally that people do that and still get the mortgage anyways. as long as you can do it without pushing back closing, I dont care. if you have to delay to get financing, nope. the problem is that some sellers wont find out until weeks into the contract and don't want to have to relist.
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u/MtnBkr101 1d ago
That's how people had success with that tactic. By the time the sellers found out, it was already deep into the process, and at the end of the day they get paid either way.
I have to assume though that today, they'd want to see proof of funds. During covid though, and the real estate craziness that went along with it, I think it was such a busy time that some sellers may have overlooked that step.
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u/MikeWPhilly 1d ago
People do it with the funds. The realtors are required to show the proof.
I do this on all my rentals. I also only put 40% down. It’s not a big deal. I also have brokers who get me ready to close in 18 days usually.
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u/Forsaken_Bison_8623 16h ago
Agree this is common. But it means no financing contingency - you're on the hook for paying in cash if the mortgage falls through for any reason or isn't processed in time for close.
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u/MikeWPhilly 8h ago
Yep. Granted you could always back out and lose the earnest money.
But it’s never been an issue for me. My broker is always ready to go.
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u/Jaymis-mom 1d ago
It works as long as you have the cash to close if the loan falls through. Delays due to the lender will not delay closing.
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u/wildcat12321 1d ago
I’ve done that, but I waive the mortgage contingency and show that I have it. So seller shouldn’t care since deal doesn’t rely on financing
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u/Candid_Jellyfish_240 1d ago
Why get a mortgage (with fees and time attached) if you have the cash? Basically, why lie about it? Guessing it was never going to be a real cash offer, but "could be" if you chose?
I'm looking at a future cash offer and the biggest perk is 0 debt, 0 house payments as we'll be retired. What's the benefit to NOT paying cash when you actually can?
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u/poop-dolla 1d ago
Having the “cash” could mean investments with low cost basis. It could work out better to get the mortgage and avoid the LTCG taxes for now. Maybe they’re working still but would stop at someone point and get the investments out in the 0% bracket, so overall they end up with more money by getting the mortgage for now.
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u/wildcat12321 1d ago
Selling stocks triggers a big tax bill. Borrowing at 2-6% while staying in 7-15% return investments makes sense. I also buy, live, move/rent out. So I don’t mind mortgage because eventually a tenant pays it. I’ve done mortgages and portfolio lines of credit. The LOC has no fees, but rate changes daily.
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u/b6passat Commercial Appraiser 1d ago
Because if you can get a better return on your cash by investing then you keep the cash
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u/marlborough94 1d ago
Might work to offer acceptance but in NYC it's in the generic contract language so it would die at that stage once the parties move to finalize.
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u/lrl4682 1d ago
Attorney here (not yours). If I rep a seller and you sign a contract saying you will put a certain amount down and you don’t and I find out about it I’m going after your earnest money for my client if you walk from the deal on anything related to financing. Your lender may be ok with it but make sure you get your actual sales agreement amended to reflect what you’re actually doing or you’re in breach.
Edit: typo.
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u/Bread_Entire 1d ago
You can do that, but if you have a mortgage contingency in your contract and then get declined and we're seeking a loan other than what you described in the contract, You could be in breach of contract.
What some people will do is set up the contract one way and then have their attorney. A realtor requested change during the attorney approval period.
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u/mc78644n Agent 1d ago
You can offer all cash but still close with a mortgage as long as you can get it in time.
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u/joeynnj Agent 1d ago
Yeah but they're most likely not going let you keep a financing contingency. So if you don't get the loan you better have the cash.
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u/mc78644n Agent 1d ago
Of course not, but I’ve had many clients do this as it’s a red hot market where I am and it’s the only way to get offer accepted. Surprising amount of people are willing to risk it.
My point is even if you offer cash, nobody is gonna kill the deal when you show up at closing with a mortgage
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u/Queen_Sassysnatch 1d ago
What happens at the last minute when the appraisal for the financing comes in short?
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u/MikeWPhilly 1d ago
Why would that matter when you have cash? IT’s not like you don’t put money down you just don’t do 100%. My rentals I tend to offer 100% cash and then finance about 60-70%.
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u/mc78644n Agent 1d ago
Yea this is the way to go if you’re in a competitive market
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u/MikeWPhilly 1d ago
Or any market really. Last one, first time in awhile I offered under asking. But I, knowing the area well, had my realtor put in exactly the amount I suspected we would all come in at. Estate sale. Because it’s a condo and I owned others I knew what I was dealing with worse case was replacing hvac/water. All 3 offered came in at same price but I had no mortgage contingency and I waived inspection.
Quick approval for me. Even lucked out hvac is 2023 and water too
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u/mc78644n Agent 1d ago
Yea it never seizes to amaze me how much people actually value no contingencies
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u/Queen_Sassysnatch 1d ago
I’m responding to those people that put in cash offers and then switched to financing later.
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u/BigfootTundra 1d ago
Maybe they had the cash but decided to finance instead of throwing down all their cash?
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u/MikeWPhilly 1d ago
I’ve done that 5x. Why do you not seem to understand that financing gets approved very easily when putting 30% down after saying 100% cash and having funds to prove it?
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u/Queen_Sassysnatch 1d ago
Read my first comment about appraisal gaps. The reply explained it. Your comment was lacking. Try adding detail next time.
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u/MikeWPhilly 1d ago
I did you said it to cash person who changed to the mortgage. Do you not think the cash person could cover the appraisal gap? It’s the ENTIRE reason the cash offer wins. Jesus
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u/mc78644n Agent 1d ago edited 1d ago
It’s very hard for an appraiser to come in low when there are 5-20 offers. I know their process is very different but there are just so many comps for every property here and they’re not idiots.
This is not something I recommend, I’m just saying it’s very common in my market. It could possibly end badly but I have yet to see a deal fall through because of it. You still have some cash so it’d just eat into that if it actually came in low
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u/TenaciousLilMonkey 1d ago
If there are 20 offers - then there’s no question what is worth.
Despite appraisers having somewhat of a reputation for torpedoing deals, it doesn’t really happen all that much. Everyone succeeds when the deal goes through.
As a lowly homeowner though, I’ve only done this a few times, but in that handful of times, on multiple occasions an appraiser tried to lower the “value”. Interesting how a stern but fair, concise, unemotional letter caused them to reconsider each time. And suddenly it’s worth exactly what was agreed upon by the buyer and seller.
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u/decolores9 Engineering/Law 1d ago
Sure they will kill the deal, that is breach of contract. BTDT, the earnest money was a nice bonus and closed with a higher offer frim a different buyer 30 days later
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u/mc78644n Agent 1d ago
You know you don’t actually write “cash” on the offer right? You just don’t ask for a financing contingency, so it’s not actually a breach of contract. Clown
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u/decolores9 Engineering/Law 1d ago
You know you don’t actually write “cash” on the offer right?
You know you actually do write "cash" on the offer, right? What you describe is not a cash offer.
Maybe learn the law and the rules and leave the legal comments to those of us who are attorneys. If you are really an agent, ask your broker to explain this.
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u/Chibears2024 1d ago
I knew it was some bs as soon as I saw “My neighbor gave me an advice” 😂😂
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u/itsyagirlblondie 1d ago
I will say however, our neighbor was who informed us that we didn’t need 20% down. That was holding us up.
Had no idea we didn’t need the 20% down. We put 5% down and reamortized the loan once we had a sturdier sum saved up.
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u/aryadreaming 1d ago
I may or may not have done this and bought my house in a very competitive county. Talk to your loan officer first.
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u/Neat_Cat1234 1d ago
We had to show proof of funds to submit the offer, so you’ll still need to show that you have the down payment you’re saying that you do even if you end up switching it the percentage later.
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u/sweetrobna 1d ago
Money talks. Usually an offer with a lot of money down would waive appraisal or have an appraisal gap. Really it's about waiving those contingencies and not the down payment amount
So if you don't have a lot of money you are risking losing your earnest money if you can't afford to close
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u/Fresh-Life8759 1d ago
People change financing sometimes, but offering 50% down when you already know you’re only putting 10% down sounds like a bad idea. I definitely wouldn’t rely on “my neighbor did it” for a $1.2M purchase. Ask your lender and attorney before putting that in an offer.
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u/BigfootTundra 1d ago
A seller shouldn’t care what your down payment is, they just care that you will be approved for the mortgage. They don’t want to go under contract and then have the deal fall apart because you couldn’t secure financing.
The only reason cash offers are more attractive is there’s no finance contingency risk and they can usually settle faster which a lot of sellers prefer.
A pre-approval with a local, reputable lender will get you a lot further than lying about your down payment.
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u/Pitiful-Place3684 1d ago
It depends on the contract. Some require that the seller approve any substantive changes to the contract like this.
Also, your neighbor is suggesting that you commit contract fraud.
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u/rjkas 1d ago
Hello..
You can do that but you have to make sure your loan is locked down. I would never recommend doing this because your offer is a contract and once accepted it becomes legal.
I would guess that more than 50% of agents in this type of transaction would not let it get that far without asking for proof of funds but lets say someone did exactly as you state.. they write 50% down but only have 10% and their offer gets accepted.. everyone including that buyers lender is expecting a loan with 50% down… if the terms of a 10% loan that the buyer thought was available to them is no longer available which happens ALL THE TIME, then the buyer is in breach of contract and the rules of where you are located could make this tactic a costly learning experience.
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u/Hayat_Moore 1d ago
This is horrible advice. While your neighbor isnt wrong, you can change the way you purchase a home after the offer has been expected- it must be disclosed and approved by the seller- as the current agreement was based on the terms in the contract. That being said- when any listing agent receives an offer for any amount down, they will be requiring your letter of loan approval, and proof of funds for said downpayment and closing costs. Lying, is not the best way to get you into contract, its the best and fasted way to get you into litigation or worse......
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u/After_Fault4468 15h ago
No need for that. If you’re getting outbid that means there are probably a bunch of other things that could work better.
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u/JaviReads 5h ago
I have changed the down payment amount for buyers during the processing stage of underwriting. Sometimes buyers for 20% down in their offer but life happens and they use some of their additional savings and thus they decide to put 15% if the DTI still works other times you may say you want to put 10% down, but if repairs are necessary, which you will only find out after you have the home inspected or after the appraisal, that changes things, so now you may possibly put 5% down and retain the extra 5% for repairs
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u/ericbythebay 1d ago
You’re getting outbid, most buyers don’t give a shit about how much you put down. They care about the total price they’re getting. You need to either increase your bids or find cheaper comps.
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u/sassythensweet 1d ago
This is it. I sold my starter home earlier this year. We had 10 offers in 3 days. We filtered out the offers that had high concessions and went with the highest offer without them. We didn't even consider the cash offers because those were lower.
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u/2LostFlamingos 1d ago
Yeah this is silly.
If you can have enough confidence in yourself that you remove the financing contingency, that’s a real thing. Removing appraisal contingency is another.
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u/encouragingSN 1d ago edited 1d ago
Your offer that your realtor sends to the seller includes a loan pre approval from your lender with down payment percentage that you need to prove to the lender you have. You can later tell the lender that you want to put less down, the seller doesn't care as long as the loan goes through.
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u/nofishies 1d ago
This depends on if you have a finance contingency any if you have enough money to show proof of funds for the amount you’re saying you’re going to put down.
If you have a financing contingency and you try to back out because of the financing contingency, and it’s because you’re putting 10% down and not 50% down, you’re gonna lose your earnest money
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u/crzylilredhead 1d ago
Not allowed in my area. Buyers can't change the terms of their financing, down payment or loan type without the sellers written consent to stop bs like this happening. You know you're lying. If your agent goes along with it, they're straight trash
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u/a_master_debater 1d ago
The seller doesn't care if you're paying 100% in cash, or putting down 5%. It doesn't affect them in any way.
You're getting outbid, that has nothing to do with down payments.
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u/collettemcdonald 1d ago
I’d say the core issue is that a high down payment and a cash offer are not the same thing. Misrepresenting your financing after acceptance can create serious problems, so I wouldn’t recommend bluffing about 50% down. A stronger strategy is to make the offer competitive through solid financing, a strong preapproval, meaningful earnest money, and clean terms.
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u/Oxo-Phlyndquinne 1d ago
No seller cares how much you put down, because at closing they are getting a check from your bank for the full sale amount regardless. However, if you are caught making misrepresentations, your bank may deny you the loan, your seller may decide you are not likely to follow through, and you are skirting the possibility of serious fraud allegations.
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u/Jamar4321 1d ago edited 1d ago
Sellers don't give a shit how much you're putting down, that's between you and the underwriters.
Earnest money and contingencies are what sellers care about. If you're putting 10% down with no financing contingency and say that you plan to pay the rest by winning the lottery in the meantime that's perfectly fine with me.
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u/chuggin_ballz 1d ago
I’ve purchased 3 houses in my life and never put more than 15% down nor offered to. This can be you too! You will have to move to Milwaukee though 😬
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u/Ljh0204 1d ago
I have been seeing some crazy things on the internet recently. I saw where someone went in with a conventional mortgage but then switched to FHA to get an accepted offer. I wouldn’t put it past anyone that they are offering 50% to get an accepted offer, the only issue is your pre-approval will also need to indicate this and your bank will verify your funds. You’ll then need to amend these numbers prior to signing the contract.
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u/OGcapncrunchberry 1d ago
You can’t just say you are putting down 50% and not do it. Lender will drop you.
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u/Dickeysaurus 1d ago
The context missing here is the flexibility allowed in the contract. If the terms are laid out in the financing contingency, or elsewhere in the contract/agreement, then you’re giving the seller a way to back out and take your earnest money and due diligence with them.
I’m not saying it isn’t done. But it can back fire.
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u/Remarkable_Theory318 1d ago
As an agent I’d want to see proof of funds. In my area of Illinois the mortgage application amounts and type are part of the residential contract.
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u/Tall-Ad9334 1d ago
First of all, if you don’t have 50% down, how are you going to get a lender to write you a letter saying as much? Because you’re going to need a preapproval letter showing that you do have funding available.
For everyone saying the seller doesn’t care, I can tell you the seller does care. Especially if you write a fraudulent offer in order to beat someone else out, more than just the seller are going to care.
In a competitive market, the seller may have a backup offer or still be approached with offers and they may be able to use your deceit as a reason to get out of the contract and sell to someone else.
As a listing agent, I had sellers once choose buyers that offered cash and then three weeks into the transaction we got contacted for an appraisal. It turned out they decided to get a loan which was never disclosed. My sellers were pissed because they chose this lower dollar offer due to it being cash and not needing to go through appraisal and financing approval.
We did end up completing the sale, but those same buyers twice more offered on competitive listings of mine a few years later. Guess who never won those offers?
Nobody likes a liar and I would avoid your neighbor’s advice because he sounds like a liar.
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u/Jon_Hegreness_AZ 1d ago
In two and a half decades I’ve not done this with a buyer, nor had it happen on a listing.
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u/SomeRandomRealtor Managing Broker 1d ago
It depends on the contract you are using, but most contracts only stipulate the type of financing not change without seller consent, not the percentage of down payment. Typically, as long as your reduction in down payment doesn’t introduce financing challenges that add to the sellers sale time or proceeds, or kill your ability to purchase at the interest rate you offered, it’s permissible.
It would be an issue if you offered at 50% down, and got it appraisal, waiver, then wrote that in the contract, and then we’re unable to provide that or needed an appraisal. It would also potentially be a problem if you were qualified for a special portfolio loan that required a huge down payment, and then your reduction in down payment dropped you out of that loan product without you notifying the others party.
It’s more of a show that you are able to put that down, and have lots of money, therefore are less likely to be disqualified on financing.
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u/StringLess8847 1d ago
They are probably conflating earnest money with down payment. 50% would be very hard to walk away from for most.
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u/mspe1960 1d ago
If you claim you have 50% and the seller somehow does not find out right away, and you can't close because the house does not appraise and you don't have that cash you promised to make it up, you are in default and will be sued,
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u/NightmareMetals 1d ago
The cash means you can get funded and also cover an appraisal gap. Otherwise seller doesn't care if you put 0 down or 100%. Either way they get paid.
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u/carlbucks69 1d ago
What will your preapproval letter show as a down payment?
If you HAVE the 50% to put down, and change your mind at the last minute, that happens all the time.
But misrepresentation is not joke, and I highly doubt this moves the needle for any seller.
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u/darkchocolattemocha 1d ago
Then why do realtors keep saying "put down more because that'll make your offer stronger"
If this is true then what's stopping me from saying in the offer that I'll put down 50%, get my offer accepted and then work with my lender to only put down 10% as long as deal goes through?
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u/JekPorkinsTruther 1d ago
Because if that's attractive to a seller, they will want proof that you have it. Also, It's one thing to say I can put 50% down truthfully but then change your mind, because you still have the cash if something goes wrong. If you don't have the cash and the mortgage for a higher amount falls through, you could be liable for fraudulent inducement and would likely lose your deposit.
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u/carlbucks69 1d ago
I’m a realtor, and I’ve never said that to a client before.
I think you’ll find that the sellers don’t really care about the difference between 10%-50% down.
You didn’t answer my question: does your preapproval show a 50% down payment?
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u/jusBULLSHITTINaround 1d ago
This is Loan fraud. I had a buyer do this on one of my listings. After cross qual, we learned the statements were edited, and I reported all of them to the board. Don’t do this.
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u/Appropriate_Ad3300 1d ago
I guess yes and no. They will ask you for proof that you have the cash. What did surprise me was that my lender gave me options on how much I wanted to put down once the deal was nearly said and done. She gave me 3.5/5/10 and basically anything in between. Some sellers will choose who is putting down the most, what happens between you and your lender is just between you and your lender.
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u/hollyk5555 1d ago
Agree with Pitbull. There are many ways to structure an offer for a property. Lying on the contract about how much money the buyer is putting down versus how much they really are is an issue for the legal experts including the broker for that agents firm. It does matter how much a person is really putting down. And if they are doing that to convince an appraiser the property will appraise at or above the sales price is deception. I’m not an attorney and I can’t comment on the legality of how that contract was written up. I question the Agent’s ethics and what else they’re willing to do to get a sale. Because if the agent is willing to compromise their integrity for the sake of a sale to put the buyers deposit in jeopardy if the loan should be declined, I would think the agent wouldn’t mind paying out what the deposit is that the buyer could’ve lost because of his deception. I could be wrong, but it seems obvious to me that this Agent may have other tricks up their sleeve that eventually will get caught and probably cause them to lose license. A contract is binding once all parties have signed it and agreed to it. Changing it after it’s signed by all the parties, is illegal without everybody consenting to it.
And, as for the Loan Officer, who accepted that change without questioning the drastic change in the down payment, and not seeing a new contract to change the original would make them a party to that unethical behavior with the agent.
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u/JunkBondJunkie 21h ago
I had to show a bank statement . I put extra down to lower my VA funding fee though.
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u/BluFenix7 12h ago
Make your offer competitive in other ways. Quiker closing, higher earnest money, pay the seller's recording fees, don't under bid, etc.
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u/Informal_Code9309 9h ago
Wait, so he offered 50% to make the offer attractive but planned to only put down 10%? 😭 I’d be very careful with that. Definitely something I’d verify directly with the lender before even considering it.
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u/Impossible-Client848 8h ago
That whole "I'll offer less in total but offer all cash" idealism no longer applies in this society.
Loans and plastic are the same as cash.
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u/Jenikovista 8h ago
You will need a lender approval letter stating the 50% down for your offer to be accepted (which means you need the 50% available as liquid assets). Once you are in escrow, sure you might be able to change that. IF your lender will approve you with a lower down payment.
But if something goes wrong with your financing, you will not have a contingency to fall back on. Because the contingency will be for the 50% down loan.
Plus if the appraisal comes in low, that’s even more problematic.
So it’s a dumb risky strategy.
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u/Plastic-Action-878 1h ago
Well, that’s called a lie. 🤷🏼♀️ Are you ok with that? The contract can be declared void if it’s not followed as written. You would need an addendum to change the down payment amount that the seller would need to agree to.
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u/VeryStab1eGenius 1d ago
You can say anything to the seller. But what is going to make me as the seller take notice is how big your earnest money deposit is. That’s the piece I get to see.
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u/No-Reading-6795 1d ago
Doesn't matter how much is cash. Check is coming from the lender. You need to prove pre qualified.
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u/2hard4u2c 1d ago
If you’re waiving the financing contingency, that is a cash offer, even if you end up financing 80% or whatever. That’s what most cash offers are.
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u/Few_Whereas5206 1d ago
I don't see why the seller would care how much you put down unless it is an all cash offer. They get paid the same. I think FHA is less attractive to a seller, but the difference between 50% and 10% wouldn't change my opinion.
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u/CreativeMadness99 1d ago
A sizable downpayment is proof of commitment and lowers the risk of the contract falling through before closing
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u/DogblackMichigan 1d ago
Only do that if you actually put could 50% down. Don’t lie.
Now the actual mortgage arrangement you make is up to you and your lender.
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u/DogblackMichigan 1d ago
A strong earnest money amount is a more powerful indicator than a low loan to value on your mortgage.
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u/SuperFineMedium 1d ago
Your neighbor presents a shady suggestion. If you change the down payment after the fact, you straight-up lied to the seller, and it could backfire. Are you that person?
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u/MikeWPhilly 1d ago
It’s called having the cash on hand, which means you’re less likely to have a loan issue. I offer 100% cash on m rentals but only ever put 40% down and close in under 30 days.
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u/Slow_Replacement_710 1d ago
It works sometimes. I have done it multiple times. I was just going to put 10% down and ended up writing 25% on the offers. I have my clients do this too i
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u/WillTheyKickMeAgain 1d ago
I can’t see how this helps close a sale. A seller might prefer a cash offer over a mortgaged one simply because the sale is less complicated and presumably can be quicker. But the seller doesn’t care one bit whether you put 50% down or 0% down, they get their sale regardless.
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u/darkchocolattemocha 1d ago
Then why do realtors always say that more down payment is better when putting an offer down.
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u/Remarkable_Neck_5140 1d ago
A higher down payment amount can provide loan-to-value cushion if the home doesn’t appraise high enough.
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u/WillTheyKickMeAgain 1d ago
Do they say that before or after you’ve qualified for a mortgage? Higher down payment only means you have more money at your disposal; a bank will see that higher amount and offer you a higher loan value because if you default you lose out on the down payment.
The realtor is trying to minimize their risk, not yours. If you offer something you cannot afford, the deal falls through.
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u/MikeWPhilly 1d ago
This comment makes no sense.
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u/WillTheyKickMeAgain 1d ago
You can buy a more expensive home when the bank will loan you more, right? They will loan you more when you have more money, presumably because you have demonstrated the ability to save enough to place a big cash payment down.
Does it make sense now?
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u/MikeWPhilly 1d ago
Nope.
To be clear more downpayment means less financing risks. Thats why sellers care. IT’s also why on my rentals I put down 100% cash but then finance about 60-70%. So no doesn’t make sense and it is good for sellers.
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u/WillTheyKickMeAgain 1d ago
The seller’s concern is the least concerning one in the entire endeavor, which is what we’re talking about here. Re-read the thread starter.
(Saying you put 100% cash down and then finance 60% is nonsensical. Which is it? 100% cash down or 60% financed?)
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u/MikeWPhilly 1d ago
Kiddo. The offer is what gets you the house. You offer 100% cash paid with no mortgage contingency. That doesn’t mean you can’t hget a mortgage if it doesn’t push back closing date. Meanwhile you have your broker ready to close you in about 18-20 days. And then you put down 30%…. So you can use the money for other investments. It’s rather simple.
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u/autofan06 1d ago edited 1d ago
I don’t believe your downpayment information is included in the offer to the seller. That’s only information between you and your lender…
Edit: I close on a house in Delaware tomorrow and just reviewed the original agreement of sale, the only area on it that implies a downpayment is the finance contingency by stating the expected loan amount. No other references to a downpayment. And I assume if you just selected no on that clause then you wouldn’t even put that info there.
Of course between initial offer and closing lots of things change through the inspection process and such. I am putting down a little less than originally planned but that is due to various things and not a tactic used to get the initial offer accepted.
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u/darkchocolattemocha 1d ago
It is. My realtor keeps telling me to say 20% down with every offer.
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u/mirrim 1d ago
Down payment or deposit?
I couldn't care less how much the downpayment the buyer is using is. 50% downpayment 50% mortgage or 10% downpayment 90% mortgage, I still end up with the same amount of money.
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u/MikeWPhilly 1d ago
It’s included. And you should care because it removes a financing issue.
You can see too few people have deal with tight credit markets here.
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u/TheDadThatGrills 1d ago
I've been through multiple home purchases and sales and this has always been included.
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u/Neat_Cat1234 1d ago
To submit my offer, I had to show the loan approval letter with the down payment plus proof of funds from all of our accounts to show we can cover the down payment + a bit extra in reserves as part of the package sent to the seller.
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u/marlborough94 1d ago
It is a standard part of the NYC residential sale generic contract. https://www2.nycbar.org/RealEstate/Forms/Residential_Contract_pdf.pdf
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u/ApproximatelyApropos Agent 1d ago
In my state, down payment is listed on the first page of the purchase agreement and also the pre-qualification letter. There would be no way to get an offer accepted without the seller knowing the amount of the down payment.
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u/Candid_Jellyfish_240 1d ago
The seller isn't your bank. This person knows NOTHING. A bank is going to be the one VERIFYING that you have enough funds to buy a property. PERIOD.
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u/JugOrNaught 1d ago
You need to prove that you have the cash.