There is no denying that we are in a purchase market, unlike anything we have seen before. The competition is so high it is more important than ever to stay focused and intentional when entering the market. Getting an offer accepted right now is more challenging when the demand outweighs the available supply. Do you have to go above the purchase price to win the bidding war? Is getting pre-qualified or pre-approved enough?
While getting pre-approved is a significant step in the mortgage process, you can have all of your finances in order and know the dollar amount you can afford and still lose the bidding war. The number of all-cash offers – way over the asking price, might we mention – is winning out other buyers. Why? Because cash offers are much more appealing to a seller. Offering cash will increase the chances of closing the deal. There are usually fewer contingencies involved and no worrying about an appraisal. When a buyer does not have to take out a mortgage to buy a home, there is less risk of financing fall-through for the seller. There is usually a faster closing time – up to only ten days compared to a month or more – because there is no waiting on the financing, which is a win for both parties.
One of the first steps is to go through the approval process. Your lender will help you get all of the required documents together, pull a credit report, and do an overview of your financial scenario. Anyone can get pre-qualified. Getting pre-approved is an ordinary step when buying a home. How do you make yours stand out?
Write a Personal Letter:
It may sound unconventional, but writing a letter to the seller can make an impact. Purchasing a home brings heightened emotions for both buyers and sellers. For a seller, this is a home they created and are now leaving behind. Parting with the emotional attachment of a home is difficult. Thinking about the seller in this light can help pull some heartstrings on why you want to buy their home. The letter introduces you on a more personal level building a connection. It is easier to sell a home to someone trustworthy and who values the house just as much as the seller.
Crafting the Offer with Underwriting:
Going one step further in any way you can as a buyer will bring you an advantage in the bidding wars. Some lenders are taking the offers and putting them in front of an underwriter. Crafting an offer and getting everything approved upfront is a wise choice. That way, it will expedite issuing an approval. Buyers can then remove the financing contingency with certainty showing the seller they can finance the house. It is representing financial security, which will make you a qualified buyer for any home.
Offer More Money:
If you know you can afford it, increase your offer to be above any cash offers. Even going over one percent higher on your bid can be enough for the seller to consider your offer more closely. This option is not for everyone. Talk with your realtor or lender and devise a budget plan that could leave room for this situation. It is best to stick to your budget; in this market, getting creative in your approach to the bidding wars can get you into your dream home faster.
These options will help you compete with cash offers. Sit down with your lender to go through any strategies to ensure the seller your deal will not fall through. That tends to be the biggest concern. As a buyer, position yourself upfront so that your offer to the seller is received in the best light possible. Your real estate and mortgage teams are on your side!
This article is intended to be accurate, but the information is not guaranteed. Please reach out to us directly if you have any specific real estate or mortgage questions or would like help from a local professional. The article was written by Sparkling Marketing, Inc. with information from resources like NAR, CNN, and CNBC.