Multiple Offers By Competing Home Buyers On Purchases

Gustan Cho Associates
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Multiple Offers By Competing Home Buyers On Purchases

This BLOG On Multiple Offers By Competing Home Buyers On Purchases Was UPDATED On June 11th, 2019

Multiple Offers By Competing Home Buyers On Purchases
Gustan Cho Associates

Choosing the right house can be time-consuming.

  • There are many qualified home buyers who need to choose the right property in the right neighborhood within a certain price range
  • Sometimes it takes weeks while other times it may take months
  • Eventually, home buyers pick the home of their dreams
  • However, there are cases when you find the perfect home for a buyer and their family but there are multiple offers on the same house
  • Cases like this happen all the time
  • Many times people’s emotions run high and many starts bidding up their offer so they can get the winning bid
  • However, paying a premium for a home with multiple offers may be a big mistake
  • Ultimately can crash the deal if the property does not appraise out
  • Multiple offers are common when it is a seller’s market
  • There are not too many inventory or if a property is undervalued

Multiple Offers And How To Be On Top Of The Game

Multiple Offers And How To Be On Top Of The Game
Gustan Cho Associates

Sellers are represented by professional realtors. Sellers are advised that there is a limit on what the house will or can sell for. The bidding war is not normally the case on multiple offers.

  • However, the seller will most likely accept an offer from the most qualified home buyer
  • All pre-approvals issued by Gustan Cho Associates Mortgage Group are full credit approvals that has been fully underwritten and signed off by our mortgage underwriters
  • All pre-approved borrowers of The Gustan Cho Team at Loan Cabin Inc. will close 100% as long as the property appraises out

Solid Full TBD Underwriting Pre-Approval

Solid Full TBD Underwriting Pre-Approval
Gustan Cho Associates

One of the greatest fears sellers have is how valid is the pre-approval letter.

  • There is a solid approval called TBD Property Underwriting Approval
  • This is when the borrower has a full credit approval that has been fully underwritten and signed off by a mortgage underwriter
  • Most pre-approvals are issued by loan officers in a matter of an hour or two
  • However, all TBD Property Underwriting Approvals are borrowers who have submitted their mortgage docs, the loan file has been processed and fully underwritten
  • It is similar to a cash offer
  • All pre-approvals issued by Gustan Cho Associates are TBD Property Underwriting Approvals fully underwritten and signed off by our mortgage underwriters
  • Sellers will take preference over TBD Underwriting Approvals versus pre-approvals issued by loan officers in cases of multiple offers

What To Do When Buyers Run Into Situation Of Multiple Offers

What To Do When Buyers Run Into Situation Of Multiple Offers
Gustan Cho Associates

Here are some tips in situations where there are multiple offers on a subject property

  • Offer sellers a solid loan commitment
    • All pre-approvals issued by Gustan Cho Associates are full credit approvals
    • All pre-approvals has been fully underwritten and signed off by our mortgage underwriters
    • We close on all of our pre-approvals
    • Same as cash offers
    • Other pre-approvals by other loan officers and lenders are not fully underwritten approvals signed off by underwriters
  • Offer a large earnest money deposit:  
    • A large earnest money deposit suggests strength
    • Earnest money can be refunded if buyers decide they don’t want the house within a certain contingency period
    • A large earnest money deposit will definitely put buyers ahead over others on multiple offers
  • Present to the sellers that the offer is from solid home buyer: 
    • Everyone with an offer will be armed with a pre-approval letter by a lender
    • Have mortgage lender to also write a cover letter along with the pre-approval letter and be armed with an automated underwriting system DU/LP approval as well
  • Offer the sellers a fast closing or a delayed closing: 
    • Buyers can offer a two week closing to the sellers
    • Or if they need time, offer the sellers they will be working with them
    • Sell yourself through the real estate agents
    • Waive or shorten the contingencies
    • If mortgage lender assures that loan approval is solid, then home buyers can waive the mortgage contingency
    • For example, buyers can get the home inspection period within 5 days of signing the contract
    • Other offers buyers can offer depending on how bad they want the property, is taking the property as is where they waive the home inspection

Overvalue Of Property

Overvalue Of Property
Gustan Cho Associates

Be prepared that if going into a bidding war with multiple offers, the subject property might not appraise out.

  • If this is the case, buyers need to come up with the difference between the appraised value and the actual sales price as an additional down payment
  • If buyers offer this to the sellers, the seller might take their bid over the multiple offers

Home Buyers who need to qualify for a mortgage with a direct lender with no mortgage overlays on government and conventional loans, please contact us at Gustan Cho Associates at Loan Cabin Inc. at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. All of our pre-approvals at The Gustan Cho Team at Loan Cabin Inc. a full mortgage loan credit approvals that have been fully underwritten and signed of by our mortgage underwriters.

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