Real life lake home seller experiences - low down payment loans

Our goal with these lake house home selling tips is to help you the seller to be educated about the lake home selling process, misinformation about what to do, and to be confident that you are making the right decision.  Confident about making the right decision because you have read about some of the situations that may come your way.  This one recently happened to one of my clients in Farmington Michigan, but it could be any lake house in Oakland County.

Many times in the real estate business we have to deal with misinformation.   A seller or buyer's friends, co-workers, and in this case the real estate attorney gives them information that is false or misleading.  Their friend may have had a bad experience that was out of the ordinary and now has scared the buyer or seller.

In my recent case last month.  My seller's real estate attorney told them not to take an offer with a low down payment.  WHAT?  IS THIS ATTORNEY CRAZY???  Let's start with the facts.  There are many different types of low down payment loans.  The four major types are:

1.)  FHA     3 1/2% or more required for down payment

2.) Conventional Loans allow as little as 3.5% down

3.) USDA rural development loans allow no money down

4.) VA loans allow no money down

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These are just a few of the ways to buy a house with a mortgage and they are all great ways to buy a home.  It does not matter if it is a Lake home for sale in Waterford Michigan or a lake house in Highland Michigan.  Low down payment loans are not "bad".  There are thousands and thousands of these four types of loans closing monthly.  Millions of these types of loans close each year.  Mortgage lenders pre-approve these buyers for these types of loans.  They are good loans. 

So why would a real estate attorney turn a sellers opinion of low down payment loan as bad?  Depending on the quarter FHA loans account for 15% - 28% of all loans done.  If you add in VA loans, rural development loans, and low down payment conventional loans they probably account for about 40% or more of all real estate purchases (Now this is just our estimate)

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If you have multiple offers it would be common real estate practice to take a cash buyer, or a large down payment buyer over a low down payment home buyer.  HOWEVER....if it is ridiculous for  real estate attorney to taint a seller's opinion about a low down payment loan.  The community we were selling in was a starter home area where the buyers most likely were going to have a low down payment loan.  What matters to the seller is whether the buyer was pre-approved by a reputable mortgage company.

So essentially this local Michigan real estate attorney was cutting out 40% or more of the Michigan lake home buyers if they did not accept a low down payment offer.  We received 3 offers and all three were low down payment loans.  So I had my work cut out for me because the client relied on the attorney.  We had to supply information on how many loans were low down payment loans.  We had to realign the seller's opinion with the true facts. 

FHA loans, Rural Development loans,  VA loans, and 5% down conventional loans are all good ways to buy a home.  Buyers with pre-approval letters should not be turned away just because it is a low down payment.  It would be crazy to do that.  It would be a major slap in the face for veterans to be told that a seller is rejecting their offer because of their no money down VA loan. 

Of course if all items are the same you want to take a cash offer or an offer that has 20% down over a low down payment offer.  But that is another home seller tip.

This real estate attorney only hurt his client.  He was way off base to make a statement like that.  So it made us think that this attorney was either not experienced or just did not know his business.  It made our job a little harder and the seller was very nervous on what to believe. 

So if you are a Michigan lake home seller do not eliminate good buyers because the loan they are using is a low down payment loan.  If you have more questions about the home buying or selling process give us a call on our cell (248) 320-6840 or (248) 310-6239.

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