The offer

A - Purchase Offers: What are the basics for opening offers?

The small down payment:

If you’re concerned that your property might not appraise, look closely at how much the buyer will put down. If it's a minimum amount down (especially less than 10%), lenders will scrutinize the appraisal very closely.

Anytime a home goes into foreclosure, the lender repossesses the property and then has it resold. The proceeds from that sale need to cover the existing loan and give the lender excess funds to cover legal fees, administrative costs, perform repairs, maintenance and pay a Realtor’s commission.

A foreclosed loan with a small down payment means there will be a large existing loan to payoff, leaving very little to cover expenses. Therefore, lenders are more likely to reject a loan request from buyers who put down a small amount on a home with a borderline appraisal. 

The large down payment:

Lenders like to see the buyers put 20% or more down. It’s their magic number.

All else being equal, 20% down will satisfy the lender’s apprehensions. Appraisers can almost drive-by a property with 40% down and a quick glance tells them that a property will easily appraise.

That’s because if the loan goes into foreclosure (which is even more unlikely from buyers with such a large down payment), there will be excessive funds from the foreclosure sale to cover the loan balance and all expenses.

You often eliminate appraisal issues when your buyers put down a large amount, especially a third or more of the selling price. 

Multiple offers:

If you’re in a dual offer situation, seriously consider buyers who put a lot down when financing the property versus the buyers who may offer a little more, but put down next to nothing.

Buyers with a very small down payment have been known to bid higher than the asking price in order to appeal to the seller’s desire for the highest price offer.

Your bottom line:

You may be asked to pay for a portion of the buyer’s closing costs. Sharp buyers who sense that you are fixated on a specific selling price could work the negotiations so that you get your price, while they get you to pay for closing costs that are traditional buyer's expenses.

Always keep your eye on how much you'll net.

First offer–the best offer?

Marilyn vos Savant, in her weekly column "Ask Marilyn",  in Parade Magazine, was asked her opinion on the theory that your first offer is your best offer.

She answered, “When an item–or home–is first put on the market, it gets attention from the largest number of people in the shortest period of time.

At this point, a potential buyer is more likely to make an aggressive offer so that you don’t turn him or her down and wait for better bids. Combine this scenario with the fact that owners often have inflated opinions of their possessions (especially their homes), and it’s clear that the theory makes sense.”

Spoken like a pro.