When 5% Down Scares Away Sellers – What To Do

Half of all homebuyers getting a mortgage in April put down over 20%. 

In the past ten years, the percentage of homebuyers putting 20% down has exceeded 50% three times. That is a big deal because all three times were relatively recent.

In addition, over 25% of purchases in April were all cash.

This data was shared in this recent WSJ article: For Many Homebuyers, a 5% Down Payment Is Not Enough.

A primary reason buyers are putting so much down is because sellers won’t accept offers with lower down payments in this incredibly hot market – ostensibly.


When I read the WSJ article I thought “hmmm, that is interesting because we have so many low-down-payment buyers in contract right now…”

And this is why:


Our clients are able to make offers with no or very short contingencies because we pre-approve everyone, order super-rush appraisals, and move very quickly.


Most of our low-down-payment buyers (including FHA) can offer 14 to 17 calendar-day closes, along with no or very short contingencies – making their offers almost equivalent to cash.

Calling Listing Agents.

This is significant, as a pre-approval letter alone is often not enough. A verbal assurance from the lender that the buyer has actually been fully pre-underwritten and is truly as strong as the letter says seems to seal the deal surprisingly often.

Appraisal shortfalls.

This might be the most significant factor, as sellers are very worried about appraisal shortfalls in this market and they are often unwilling to come down in price if the appraisal comes in low or under the contract price. Hence, low-down-payment buyers often need to provide assurances that they can come up with the extra funds necessary to cover a potential appraisal shortfall with either gift funds or savings. This is often the first thing listing agents ask about when we call in fact. Unfortunately, for cash-strapped buyers with no access to additional cash, the appraisal shortfall issue is sometimes insurmountable.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167

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