The housing market in the Pacific Northwest remains competitive with the continued lack of inventory. Home buyers need to be patient and prepared for the process to possibly take a while. There are some actions that you can implement to help improve your odds of having your offer accepted over other offers.
Chose a local, respected mortgage professional. I was going to close with this point, however this is where you need to start! 🙂 It’s critical to work with a mortgage professional who has a good reputation in the real estate community and not an internet or big bank lender. The listing agent will review offers with the seller, which includes factoring who the mortgage professional is that the buyer is working with. If the listing agent has had bad experiences with the lender (or if the lender has a bad reputation), this may be a strike against your offer. The listing agent needs confidence that your purchase will close smoothly and on-time. The listing agent also wants assurance that they can reach the mortgage professional with questions or concerns when needed. In addition, the mortgage professional you select needs to be able to help you with the following points (listed in this post below) and navigate your home buying journey from preapproval to closing.
Get pre-underwritten approved. A “pre-underwritten approval” is slightly different than a standard preapproval, where you complete a loan application and provide your income and asset documents. A “pre-underwritten approval” takes the next step with having the actual human underwriter review and approve your application. This means that the only thing left for the underwriter to approve once you have an accepted purchase and sales agreement is the home, which means that you are typically able to close much faster than other offers. This leads us to our next point.
Be able to close fast. When you’re competing against other offers, sellers are reviewing how much you’re offering for their home, your earnest money, down payment, the lender and your closing date. Sometimes a seller might want a longer closing date or the possibility to rent back for a few weeks (lenders require that you occupy the home within 60 days of closing when you are buying your primary residence that you intend to live in). Most often, a seller will appreciate that you can close quicker than 30 days. A seller having their proceeds from the sale of their home in two weeks is more desirable than having to wait a month. In order to offer a quick closing to a seller, it helps to be fully pre-underwritten and/or to be able to utilize a cash buyer program. The last home buyers I helped were able to offer closing in two weeks and their offer was accepted (they had less than 20% down payment and their offer was accepted over other offers).
Understand the numbers: Bidding wars, low appraisals and commissions. Your mortgage professional should review strategies regarding how your offer may look like, including how long it will take to “break even” on bidding above the list price. What do your payments look like if you need to bid up $5K, $20K or more in order to “win” the bid. What happens if the appraisal comes in lower than expected? What if the seller is not offering to pay your real estate brokers commission? Understanding the numbers helps to reduce the stress involved with the “what ifs. You may be surprised that bidding up on a home doesn’t impact the payment as much as one would think as cost is amortized over 30 years with a typical mortgage.
Presenting your offer. I work in concert with the buyer’s agent when an offer is being presented to the listing agent. At this stage, my clients and I have reviewed the possible scenarios for the specific home they are wanting to make an offer on. With my client’s permission, when their offer is being submitted, I call the listing agent to introduce myself as the buyer’s mortgage professional and I answer any questions they may have (subject to my client’s permission). Once we’ve concluded our conversation, I send the listing agent our digital offer. The digital offer is a game changer as it stands out above the other offers and shows the listing agent our level of commitment to seeing the purchase through to closing.
Cash Buyer Program. Last but not least, we have a program that allows you to essentially make a cash offer on your next home. Your real estate broker needs to take an online course to become certified to present offers on behalf of NAF Cash. Once NAF Cash buys the home, on your behalf, you purchase the home back from NAF Cash with a service fee. This also allows you to offer the seller a fast closing as the transaction is an actual cash offer. This program is available for home buyers who will be using conventional of VA financing when they buy the home back from NAF Cash AND it’s also available if the buyer is not going to use a mortgage to buy the home back (ie they have other funds they will utilize to buy back the home). You do not need to own a home to use this program, however it can work similar to a bridge loan if you have a departing residence.
Want more tips? Here are some steps I recommend you take BEFORE you start going to open houses.
Are you thinking of buying a home? Even if you’re planning a year or more out, it’s never too early to start the preapproval process and developing a strategy. I’m happy to help you or anyone you know! Click here to schedule a call or here to start a pre-application by clicking the “get preapproved” button on this blog.
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