Financing Impact To Offers

Type Of Financing Used

Yes, even the type of financing can affect the seller's acceptance of your purchase offer.  For instance, if your purchase offer is contingent on attaining a loan, while there is another offer from another buyer on the table, that is a completely cash deal, the seller will most likely accept the cash offer.  Other finance related items that can affect a seller's acceptance decision, will be the type of loan that you may have indicated in the offer that you will be attaining.  As an example, some types of loans require the seller is to pay certain costs, as a government regulation, therefore the seller may not be willing to negotiate on the selling price.  This does not mean however that you must purchase a property with cash only, it just simply means that you need to be aware that your offer will be scrutinized by the seller, as to what will affect his bottom-line at the sale completion.

Consider The Prevailing Interest Rates

If dependent on attaining a property loan, you should consider what the present interest rates are, and determine the maximum rate (as a contingency of fulfilling the contract) of what you expect to attain the loan for (willing or able to make a loan for), on the purchase offer.  This protects you, that, in case the interest rates on the loans that you get approved for, goes higher than the rate you placed in the contract - meaning that the required monthly payments will now be out of your ability to make comfortably - you have the option to withdraw your purchase offer without further obligation.  If this is the case, then you should also be able to have your earnest money returned to you minus any agreed to  cancellation fees between you, the seller, and the real estate brokerage companies.

Is The Seller Offering To Finance?

Sometimes the seller will offer to finance the agreed upon sales price, at which you will make payment to the seller versus a financial lending institute.  In this case, the seller will retain the rights to the property until payments have been fulfilled.  Once all payment obligations have been met, the rights to the property should be transferred over to you. There may be special stipulations on this type of arrangement, and you need to understand the various impacts of those stipulations.  Sometimes this is advantageous to you, but really depends on your financial situation, and it is always best to consult a financial advisor before you enter into any agreements of this type.  A good advisor can provide you with various scenarios that will best fit your needs.