Why does a real estate seller get to know the financing arrangements of the buyer?
The buyer discloses the financing arrangements to the seller because it makes his offer more attractive. When a seller receives and accepts an offer, the deal does not usually close until 30 to 60 days later.  If the buyer cannot come up with the money by closing, the deal falls apart.  This is a risk for the seller. When a seller is considering whether or not to accept an offer, it is helpful to know the likelihood that the buyer can actually obtain the amount of cash in the offer by the closing date.  If the buyer can't acquire the funding, the offer isn't worth the paper it is printed on. The amount of the down payment vs. the amount of financing is also relevant to the seller.  Let me give you a real-world example that happened to me once when I was selling a house.  The buyer was doing a no-money-down mortgage and had no money for a down payment.  He was even borrowing the closing costs.  We accepted the offer, but when the bank did the appraisal, it was short of the purchase price.  For most home sales, this would not be a problem, as long as the appraisal was more than the amount borrowed.  But in this case, because the amount borrowed was more than the appraisal, the bank had a problem.  The deal was at risk, and in order to continue either the buyer had to find some money somewhere (which he couldn't), or we had to lower the price to save the deal.  Certainly, accepting the offer from a buyer with no cash to bring to the table was a risk. (In our case, we got lucky. We found some errors that were made in the appraisal, and got it redone.)
but it feels like this is being done on purpose to artificially inflate the sales price. Yes. Is there anything unethical or illegal with 2 listing agents disclosing details of the contracts, and using that as leverage for the sellers NOT to come down in price?   No. They're working for the sellers and in the sellers best interests. You missed the catch, there is always a catch, and in this case it is not well publicized.   First, some background. Congress (both parties) in 98 passed Graham-Leach-Bliley. It allowed commercial banks to invest, securitize, and insure securities. It also had privacy provisions, which prevented a securitizer of a mortgage from providing ANY personal information about the mortgage. That means that as Chase wrote these mortgage backed securities, they were forbidden, BY LAW, from telling the potential purchasers the addresses of the houses or SS#'s of the purchasers.   OF COURSE Chase did not choose to insure these MBS's themselves. Instead, they chose a third party like AIG because AIG could not know personal information about the mortgages, and was thus blinded to risk. AIG chose a middle of the road risk rating (something like 2% risk of default).   Chase FRAUDULENTLY represented the quality of the mortgages to the people writing the credit default swaps to insure them, and to the potential buyers. Chase KNEW the mortgages were crap.   Fraud is fraud and is illegal in security sales even after Graham-Leach-Bliley. However, to be clear, in this case there does not need to be any faking of paperwork. The loans can be passed along BLINDLY with insurance, as they were. If it could be documented that Chase misrepresented the quality of these AAA MBS's, they would be on the hook. But the catch is that Graham-Leach-Bliley offered them a cop-out.  AIG were the real dummies in all this. Who writes insurance without having a good idea of the risk.... "At the most fundamental level, every market is comprised of buyers and selling trading securities. These buyers and sellers decide what and how to trade based on the probability of future events, as they see it. That's a simple statement, but an example demonstrates how complicated it can be. Picture a company that's about to announce earnings. Some investors/traders (from here on, ""agents"") will have purchased the company's stock a while ago, with the expectation that the company will have strong earnings and grow going forward. Other agents will have sold the stock short, bought put options, etc. with the expectation that the company won't do as well in the future. Still others may be unsure about the future of the company, but still expecting a lot of volatility around the earnings announcement, so they'll have bought/sold the stock, options, futures, etc. to take advantage of that volatility.  All of these various predictions, expectations, etc. factor into what agents are bidding and asking for the stock, its associated derivatives, and other securities, which in turn determines its price (along with overall economic factors, like the sector's performance, interest rates, etc.) It can be very difficult to determine exactly how markets are factoring in information about an event, though. Take the example in your question. The article states that if market expectations of higher interest rates tightened credit conditions... In this case, lenders could expect higher interest rates in the future, so they may be less willing to lend money now because they expect to earn a higher interest rate in the future. You could also see this reflected in bond prices, because since interest rates are inversely related to bond prices, higher interest rates could decrease the value of bond portfolios. This could lead agents to sell bonds now in order to lock in their profits, while other agents could wait to buy bonds because they expect to be able to purchase bonds with a higher rate in the future.  Furthermore, higher interest rates make taking out loans more expensive for individuals and businesses. This potential decline in investment could lead to decreased revenue/profits for businesses, which could in turn cause declines in the stock market. Agents expecting these declines could sell now in order to lock in their profits, buy derivatives to hedge against or ride out possible declines, etc. However, the current low interest rate environment makes it cheaper for businesses to obtain loans, which can in turn drive investment and lead to increases in the stock market. This is one criticism of the easy money/quantitative easing policies of the US Federal Reserve, i.e. the low interest rates are driving a bubble in the stock market. One quick example of how tricky this can be. The usual assumption is that positive economic news, e.g. low unemployment numbers, strong business/residential investment, etc. will lead to price increases in the stock market as more agents see growth in the future and buy accordingly. However, in the US, positive economic news has recently led to declines in the market because agents are worried that positive news will lead the Federal Reserve to taper/stop quantitative easing sooner rather than later, thus ending the low interest rate environment and possibly tampering growth.  Summary: In short, markets incorporate information about an event because the buyers and sellers trade securities based on the likelihood of that event, its possible effects, and the behavior of other buyers and sellers as they react to the same information. Information may lead agents to buy and sell in multiple markets, e.g. equity and fixed-income, different types of derivatives, etc. which can in turn affect prices and yields throughout numerous markets." "Maybe things are different in California. I live in Michigan and have bought several house (over the course of many years) in Ohio and Michigan, and I have never hired a lawyer. Yes, there are all sorts of contracts to sign, but these are all standard contracts. I'm sure people contracting for a $50 million office building have lawyers and haggle over contract terms, but for the typical home buyer, the realtor shoves the contract in front of  you and you sign it. Your choices are basically take it or leave it. If you don't like it, you're going to find that all the realtors in the state use pretty much the same standard contract. Very Late Update The paragraph you quote says ""these MAY include ..."". There are circumstances where you would want to hire a lawyer to review or negotiate documents related to a loan. But I don't think that's the normal case." The cleanest way to accomplish this is to make the purchase of your new house contingent on the sale of your old one.  Your offer should include that contingency and a date by which your house needs to sell to settle the contract.   There will also likely be a clause that lets the seller cancel the contract within a period of time (like 24-48 hours) if another offer is received.  This gives you (the buyer) at least an opportunity to either sell the house or come up with financing to complete the deal. For example, suppose you make an offer to buy a house for $300,000 contingent on the sale of your house, which the seller accepts.  In the meantime, the seller gets an offer of $275,000 in cash (no contingency).  The seller has to notify you of the offer and give you some time to make good on your offer, either by selling your house or obtaining $300,000 in financing.  If you cannot, the seller can accept the cash offer. This is just a hypothetical example; the offer can have whatever clauses you agree to, but since sale contingencies benefit the buyer, the seller will generally want some compensation for that benefit, e.g. a larger offer or some other clause that benefits them. Or do I find a house to buy first, set a closing date far out and then use that time to sell my current one? Most sellers will not want to set a closing date very far out.  Contingency clauses are far more common. In short, yes it's possible, and any competent realtor should be able to handle it.  It also may mean that you have to either make a higher offer to compensate for the contingency and to dissuade the seller from entertaining other offers, or sell your home for less than you'd like to get the cash sooner.  You can weigh those costs against the cost of financing the new house until yours sells. Shop lots of houses.  Find at least three you want and start by offering a low price and working your way up.  Your risk is that houses you would have liked get bought by someone else while you are negotiating, that is how you discover how much you actually have to pay to get a house.   Brokers only get paid if a deal closes.  That is their incentive to get you a better price.  If they know you will buy a different house unless the one they are selling gets your business, then they will work to make that happen. In a process called collateralization, your mortgage is combined with others to form a security that other can invest in. When done right, this process provides liquidity, more money to be lent for more loans. When done wrong, bad things happen.  My mortgage happens to be held by the issuing bank. Yours was sold into such a pool of mortgages. One effect of this is the reselling of the servicing of the loan. I've had other mortgages that were sold every year, but I never paid ahead. With this bank, I'm on my fifth refinance, but the bank keeps the loan in house no matter what. I don't know if there's any correlation, it depends on the originating bank, in my opinion. There is (almost) always money involved somewhere, but it doesn't have to come from you.  It can be investors, credit cards, or even seller-financing (I've done all 3). Examples: If you can find partners with the money to make the deals happen, then your job is to put the deal together.  Find the properties, negotiate the price, even get the property under contract (all without any obligation or cost on your part... yes it absolutely can be done).  Then your partners will fund the deal if it's good enough and their terms are met, etc. In some areas you can put a property on a credit card.  If you find a house say for $25,000 that will rent for $300/month, and you can put it on a credit card (especially at zero percent for a year or something similar), then you can generate cashflow as a landlord without putting up any cash of your own on the purchase.  Of course there are many risks associated with landlording and i could tell you horror stories... but we're not addressing that here. You can negotiate a sale with an owner who agrees to finance the entire purchase for you.  I once purchased 3 properties at once this way from a seller who financed the entire sale, all closing costs, everything, this way.  Of course they needed a lot of repair and such so I had to fund that another way, but at least the purchase itself cost me no money out of pocket. So these infomercials/courses are not inherently scams in the sense that what they are teaching is (usually... I'm sure there are exceptions) true.  However they generally give you enough information to get into trouble, and not out.  But that's what true learning is... it's getting into trouble and finding a way out that doesn't kill you.  =)  That's called experience, and you can't buy that for any price. "Evaluating the total cost of operation and warranty period are indeed important considerations, but the article is specifically about buyers making an expensive car ""feel"" more affordable to their budget by having smaller payments over a longer term.   &gt;“Stretching out loan terms to secure a monthly payment they’re comfortable with is becoming buyers’ go-to way to get the cars they want, equipped the way they want them,” said Jessica Caldwell, Edmunds executive director of industry analysis." You're not responsible for the mortgages on the property - those are agreements between the lender and the borrower. The risk you have is that the title search missed something.  If the seller (i.e., the bank or banks who foreclosed) did not have full rights to sell the property, and there was another party who had a lien on the property or had an interest in it in some fashion, that party could make a claim that would interfere with your purchase.  You wouldn't be responsible for the loan, but you might not end up with the title to the property if that happened. "Often the counter-party has obligations with respect to timelines as well -- if your buying a house, the seller probably is too, and may have a time-sensitive obligation to close on the deal. I'm that scenario, carrying the second mortgage may be enough to make that deal fall through or result in some other negative impact. Note that ""pre-approval"" means very little, banks can and do pass on deals, even if the buyer has a good payment history. That's especially true when the economy is not so hot -- bankers in 2011 are worried about not losing money... In 2006, they were worried about not making enough!" Disclosure: I am not an agent.  Yes you can negotiate a lower price if the seller doesn't have to pay a buyers' agent's commission, but you probably won't save the full commission, since the buyer will want to take some of those savings in exchange for the extra risks involved.  Thinks about some of the things that buyers' agents do on your behalf: I expect even a good buyer's agent has some incentive for the sale price to be higher rather than lower, as their commission is greater with higher sales price. True, but their main incentive is to make a sale or they get nothing. Since their commission is relatively low, even a 10% increase in the offer only gives them a 0.3% increase in their commission.  It usually isn't enough for them to encourage you to make a bad deal, which could hurt their reputation.  Does the answer change depending on whether the seller is using an agent or not? Some FSBO sellers are more willing to work with non-agent buyers, but the same risks above apply.   The bottom line is: you can buy a house without an agent, but you need to make sure that you can replace their expertise and time spent working for you, and that the savings are worth the additional work and risks. It could be a couple of things besides extra principal: I seem to remember hearing that some (shady?) lenders would just pocket extra payments if you didn't specify where they were headed, but I've also been told that this just isn't true. You decide whether the improvements will result in a net higher price.  You also need to figure on how long the house will be on the market and the cost of carrying the home, unoccupied.  Some people would prefer the quickest sale. Others would wait to get the highest price. If you sell to a known buyer, you avoid using a real estate agent. If you plan to sell on your own and avoid the agent, there's a bit of effort dealing with the public, especially those who just want to look at houses with no real interest in buying. (As an agent, I can tell you, there's nothing like talking for nearly an hour, and then figuring out these people are from 1/2 mile away, but just attend every open house in the area.) There is a lot of your financial information that the selling agent handles in the course of a real estate transaction, including but not limited to your pre-approval letter which states what maximum purchase price might be. Closing costs and interest rate are not details they would know unless you shared that with them, given that that is done after you go binding.  I agree with xiaomy in that, while in absolute monetary terms the higher amount should always be more attractive, the selling agent wants to ensure the transaction goes as smoothly as possible. With contracts falling through due to first-time buyers not making it through mortgage underwriting, it is in the seller's interest - and thus the seller's agent's concern - that the buyer not present such hurdles. Insofar as a higher down payment is a signal for that, then I can understand why it would be more attractive.