Hal's Mortgage Blog

While down payment requirements have increased for some programs, it is still possible to buy a home with less than 5% down…or even NO money down.

For example, FHA offers a loan program that requires as little as 3.5% down. In addition, the VA and USDA offer loans that require no down payment. Of course, there are restrictions with each of these programs that can include maximum loan amounts based on your location with FHA loans, income and property requirements for those offered by the USDA, and your qualifying status as an eligible Veteran.

In addition to those programs, keep in mind that many sellers in today's market are willing to offer concessions, such as paying part or all of your closing costs. That can decrease the amount of funds you may be required to have to purchase your next home.

Here's a thought - suppose you buy a home with a zero down loan, then receive an $8,000 Tax Credit from the IRS as a First Time Homebuyer or $6,500 as someone who has previously owned a home in three of the last five years, didn't you just make money for buying a home?

That still boggles my mind but it's true. There are people doing it every day. 

A survey conducted by the National Association of Realtors found the following reasons why an open house may be a waste of time.

1. Low conversion rate - Realtors estimate that fewer than 1% of those attending an open house will buy that property. Furthermore, 54% of all recent buyers never attended an open house.
2. People who attend open houses aren't serious buyers - most are curious neighbors and "Lookey-Loos" or tire kickers. Many are six months or more from actually being ready to make an offer. You need to sell now.
3. Close to 90% of buyers start their search on the internet - they can see more home in 30 minutes than in a whole day of open houses.
4. Security - you may be opening your home to a burglar who is checking out the scene and will come back later when you're not home. Even worse, I personally know of a Realtor who was closing down the home she was sitting when a man arrived and asked if she would show it to him. She reopened it and once inside he attacked her brutally and then fled.

If you are a For Sale By Owner, an open house may be one of your only sources of marketing, just don't get your hopes too high.

If you have your home listed by a Realtor, you can understand why he/she may be reluctant to hold your home open. They may do so to show their good intentions and prove that they are willing to do whatever it takes, however be realistic if the results are less than you had hoped for.

Sure, especially if you have lots of cash.

Over the past several months I have qualified quite a few buyers who went out with their Realtor shopping for a home, expecting to get a great buy on a foreclosure. They made offers on properties only to lose out to investors who are cash buyers.

 
Many first time homebuyers are short on cash and need the seller to pay for some or all of the closing costs. This is the same as asking the seller to “discount” or take less for the property. In the case of bank owned foreclosures they may have already priced it at their bottom dollar.

 
Sellers like cash sales because they don’t have to worry about an appraisal and they can close the deal quicker. All-cash sales appear to be between 20 - 30% of resales recently especially in the lower end, entry level homes. I personally have never seen this many cash buyers.

 
What can you do to boost your chances of getting an offer accepted? 

1. Expect to pay full listing price or more if you need closing costs paid by the seller.
2. Come up with a larger down payment.
3. Look for HUD foreclosures. Investors are excluded from new listings for the initial offering stage.
4. Work with a Realtor who has a list of recent foreclosures being prepared for sale. That way you can get a jump on the competition.
5. Write a letter to the seller, to be presented with the offer, explaining why they should sell to you. It can’t hurt and it may help when there are multiple offers.