Why Does the Seller Care About the Buyer's Down Payment?

To sum it up the seller cares because there is a perception that if you are making a larger down payment you are more likely to have the financial wherewithal to weather contingency costs that could come up during the purchase process. Things related to the purchase and personal expenses like an expensive car repair or medical expense.

Another consideration is that some uneducated buyers may make an offer on a property not realizing the lending requirements for their type of purchase. For example, I was recently working with a seller who received an offer from a newbie investor on their townhouse. The buyer planned to put 5% down, not knowing the minimum down payment requirement for this investment would be 20%. Since we requested the information we where able to avoid entering into escrow only to find out the buyer could not perform on the contract, eating up valuable market time.

Another case-in-point I recently received an offer on one of my listings where the buyers-agent thought the home fell in an area where zero down financing was available through our state. The contract read that they where putting zero down. Since I knew the property was outside of the area that qualified for the zero down financing we again were able to avoid entering into escrow.

Both of the examples above happened within about 2 weeks of each other. So although it is rare, since most buyer agents and buyers do their homework, it still is important to know.

As you can see, it is only fair for a seller to request information concerning a buyer's down payment amount. Transactions are a two-way street, both parties should be informed about the details of the deal.

If you have further questions about this topic, shoot me a call, email, or post.