Which Sacramento Home Buyers Get the Short End of the Stick?

For years, first-time home buyers in Sacramento were getting the short end of the stick, and in many ways, they still are. That’s because sellers and listing agents tend to prefer the so-called stronger buyers, which would be the home buyers with cash or those obtaining conventional loans with substantial down payments of 20% or more. Me? I don’t really care as long as the buyer can close escrow, and therein lies some of the problem.

Can the buyer close escrow? I’ve had some CalHFA buyers flake out at the last minute, due to some sort of snafu or tiny change in their financial situation. These are buyers who might not have a down payment and need down payment assistance and, if they don’t have money for a down payment, they might not have any money for closing costs either. Is that a crime? No, Sacramento home buyers can still get 100% financed loans and sellers can agree to subsidize their closing costs.

But the rules to qualify are still stringent for Sacramento home buyers with marginal assets. Then there are problems that could arise if the lender calls for repairs. If the seller doesn’t want to make those repairs, it can fall to the buyer to complete them. If the buyer doesn’t have any money, that’s kind of a tough situation. It doesn’t mean the CalHFA buyer can’t buy a home, but it could be a long road, with many rejected offers before finding a seller who will cooperate.

VA buyers fare slightly better because they aren’t receiving secondary financing to fund a down payment, the twist is they are just not required to make a down payment. Some see VA buyers as better credit risks because the bar seems to be set higher. Again, though, there are sellers who are reluctant to sell to a VA buyer, but that’s generally due to being misinformed. They think it will cost more or some crazy notion. I love to be in escrow with VA buyers on my listings because I’ve never had any of them fall out, and they all close escrow.

Can’t say that about CalHFA Sacramento home buyers buyers. But that doesn’t mean I would ever advise a seller not to take an offer simply because the buyer was obtaining down payment assistance. Everybody deserves to achieve the American Dream.