Bidding War - FHA vs Cash

[Nicholas M.]

FHA vs Cash Buyer 2 Family home for sale close to NYC. There are multiple offers on the house. 2 stand out. One buyer is coming with just shy of 40% down and the 2nd offer is bidding 30k more on the home with 5% down. What advice would you have in this situation. I believe cash is the better choice?

[Frank Wong]

Hi Nicholas,

You would want to get the cash buyer or the one with 40% down up in price. Counter those offers and see if they will come up.  There is a problem with the buyer with 5% down.  If the house doesn't appraise for the contract price that buyer does not have the funds to close.  They will try to renegotiate the price down or cancel the deal.  That will put you in an awkward situation and waste your time.  More importantly, the buyers that could have closed might be gone. 

More money doesn't always mean the better deal.  You want the deal that has the highest percentage to close.  Counter the other offers back and see what they say.