Clients of mine, Jennifer, Larry, and I were out for the past 8 months looking at houses. These are excellent buyers with stable work history and excellent credit. Their expectations for a house fit along nicely with their budget. The problem, very, very little inventory. I estimated that I drafted at least 6 offers for them that were at over or asking price and we got beat out on each and every one of those. Why? The other offers were at times higher or the other offers had a higher downpayment.
Jennifer & Larry started with their offers by putting down the minimum 3.5%. I let them know that if someone was all cash or at 20% down with a similar offer that they were most likely going to get beat. Gradually, with each new offer on the next houses their downpayment began to rise. They got to 10% on a 600k house and with their 60K downpayment above asking, they still got beat.
One night, I met up with friend and business colleague, Michael Blasius from Homebridge at the classic Allendale Bar & Grill. Over a few drinks, I began to tell the story of my frustration with Jennifer & Larry's situation. "Michael, we just got beat again. They were over asking and they got to where they were putting up a 10% downpayment." Michael looked at me and like a magician who was about to pull a furry friend out of his top hat said "we have a program at Homebridge where we can match a client's downpayment." They put up 10% and we put up the other 10%. The seller is seeing it as a 20% downpayment." Michael gave me some details about the program and I had heard enough to believe that this could be something that Jennifer & Larry could benefit from. After several conversations with Michael, they agreed that there were too many benefits not to take advantage of this.
The following weekend, I showed them a property and in drafting the offer instead of going in with a total of 10% down, they were able to go in with a 20% downpayment. They got the house!!! Was this just a coincidence? I really don't think so. The stronger downpayment was competitive against the other people they were competing with for the property.
