Multiple Competing Home Offers By Buyers In A Sellers Market
This ARTICLE Is On Multiple Competing Home Offers By Buyers In A Sellers Market
Multiple Competing Home Offers situations are becoming more and more popular due to rising home prices.
- There is more demand for homes than there are inventory of housing throughout the country
- Rising home prices seem to force many first time homebuyers out of the market
- One of the largest factors that is driving skyrocketing home prices is the historic low mortgage rates
- Mortgage rates is expected to remain stable at these low rates. 30-year fixed-rate mortgages is at 2.87% for prime borrowers
- The resurgence of non-QM loans is expanding the buyer’s market
Many self-employed wage earners are utilizing bank statement mortgages, asset-depletion, non-QM jumbo mortgages and other non-QM and alternative financing mortgage programs.
Historic Low Mortgage Rates Driving Up Housing Demand And Prices
Home prices have gone up throughout the United States:
- Many parts of the country, home values have increased double digits years after year since 2013
- In 2020, mortgage rates hit the lowest rate since the 2008 Great Recession
- The FED dropped interest rates to zero percent to do damage control from the coronavirus economic crash
- The Federal Reserve Board dropping interest rates to zero percent plummeted mortgage rates to historic low levels
- Home demand remained very strong despite the economic damage the coronavirus outbreak caused
- There is no sign of a housing correction
- The housing market forecast for 2021 is expected to remain strong if not stronger with mortgage rates still at historic level
- The FHFA, Federal Housing Finance Agency, increased conventional loan limits to $548,250 for 2021
- This was the fifth such increased by FHFA due to rising home prices for five years in a years in a row
- HUD, the parent of FHA, increased FHA Loan Limits for three years in a row as well
- 2021 FHA Loan Limits is set at $356,352
In this blog, we will discuss on how to tackle Multiple Competing Home Offers and get the winning bid.
Winning Multiple Competing Home Offers In Sellers Housing Markets
Many home buyers get discouraged when putting in a bid on a Multiple Competing Home Offers situation.
- They often wonder whether or not it is worth it
- It is not for home sellers to get over a dozen of Multiple Competing Home Offers in a seller’s market
- Seller’s market markets is when there are more buyers than inventory of homes
- Home buyers should always put their offers in when there is Multiple Competing Home Offers
- The highest bid is not always the winning offer on Multiple Competing Home Offers
- Someone will get the winning offer and why can’t it be you?
There are many tricks of the trade in getting the winning bid on a Multiple Competing Home Offers situation. And it does not need to be the highest price. We will cover strategies in helping you the winning bid when you encounter multiple home offers in the following paragraphs.
Earnest Money Shows Buyers Have Skin In The Game
Earnest money is very important.
- Earnest money shows that the buyers are serious
- Larger earnest money deposits show sellers that buyers have skin in the game
- To show that you are really serious, offering large earnest money with no contingencies may get you the winning bid
This means if the deal does not close, the sellers get to keep the earnest money.
Show The Strength Of Pre-Approval
There are instances where home buyer’s mortgage loans get denied because loan officers did not properly qualify home buyers.
- This is every sellers nightmare
- Sellers prefer cash buyers
- Unfortunately, most home buyers need to obtain a mortgage
- Show the sellers that you have a solid pre-approval
- A TBD Underwriting Approval stands out and shows strength
- TBD Pre-Approvals are loan commitments where borrowers already went through processing and underwriting
The only condition left is underwriting the property and obtaining a home appraisal.
Multiple Competing Home Offers And Offering Incentives To Sellers
Offer the sellers that you can delay obtaining possession of the property after closing.
- This means that sellers have time to move out of the home after closing
- Buyers may not have immediate occupancy but it may be a great way of getting the winning bid on a multiple completing offers situation
- Home buyers have 10 days home inspection contingencies
- Buyers also have mortgage contingency timelines
- If you are dead set about the house and have a solid pre-approval by a reputable lender, you may want to waive the home inspection and/or mortgage contingencies
- Offer to pay for the bridge between the appraisal and purchase price if the home does not appraise out
- You may want to offer the best price you are willing to pay, even if it means above the sales price
Remember that price is not the only factor in getting the winning bid on a home with multiple offers. There is no set formula in getting a winning bid. A solid pre-approval letter plays a positive role in the negotiation process. Strong earnest money strength provides strength of the borrower. See if you can take out contingencies such as earnest money contingency. Fast closings is another positive negotiation term. You may want to offer time for the sellers to move out of the home after it closes. In a sellers market, sellers prefer cash buyers or homebuyers with loan commitments. Have your lender give you a TBC Underwriting Approval versus a pre-approval signed by the loan officer. A TBD Underwriting Approval is a file that has gone through the mortgage underwriting process and the underwriter has signed off on the borrower. The only thing that is missing is the subject property. Once a subject property has been chosen by the homebuyer, the underwriter then underwrites the property after the home appraisal is complete. Once the appraisal has been underwritten, the underwriter will do a general review of the borrower’s updated documents and issue a clear to close. All these positive factors create ammunition for the buyer’s negotiation leverage towards the homebuyer’s favor in getting the winning bid. It is up to negotiations between buyers and sellers. Hiring an experienced real estate agent with years of experience is very important. The real estate agent will be the key negotiator with the listing agent.