Multiple Offers By Competing Home Buyers On Purchases
This Article Is About Multiple Offers By Competing Home Buyers On Purchases
How To Tackled Cases Of Multiple Offers By Competing Home Buyers On Purchases? The housing market is booming. Booming? This word is an understatement. Homebuyers new to the housing market need to realize the new norm. The new norm is paying higher than the list price on homes. This mass housing boom and skyrocketing prices are not a regional problem. It is all over the United States. Most homebuyers need to pay at least a 10% premium over the list price to even have a chance to get the winning bid. Home prices were skyrocketing since 2013. Many homebuyers are sitting on the sidelines and have been priced out of the housing market. The only chance they have to own a home is for a major housing market correction or moving to a lower-taxed state with affordable housing. Even then, those states’ home values are skyrocketing. Both HUD and the Federal Housing Finance Agency (FHFA) have increased the FHA and Conventional loan limit for the past five years due to rising home prices. Many analysts and economists are worried about another housing bubble being in the works. In this article, we will discuss how to get the winning bid when there are multiple offers by competing home buyers.
Choosing The Right House During A Booming Housing Market
Choosing the right house can be time-consuming.
There are many qualified homebuyers 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. Many start 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 in the past but now it seems to be the norm. There are pre-approved homebuyers at Gustan Cho Associates who have been diligently shopping for their dream home for over 12 to 18 months. However, it is not locating their dream home to purchase. It is dealing with multiple offers by competing homebuyers for the same property. It is a frenzy.
Today’s Seller Housing Market And Homes Selling Over List Prices
There are cases where there are more than one hundred purchase offers on a subject property. The only way to get the winning bid is to bid over the list price. Ultimately can crash the deal if the property does not appraise out. Homebuyers need to keep in mind that if the property does not appraise out, they need to come up with the cash difference between the purchase price and the appraised value. Multiple offers are common when it is a seller’s market. Multiple offers or offers higher than the list price are common when there is not too much inventory or if a property is undervalued. The new norm during today’s hot booming housing market is placing offers higher than the list price. The average home in 2021 has been selling 10% over the list price. This is not just a regional issue but a national problem. Home sellers are enjoying getting over list prices on their homes.
Multiple Offers And How To Be On Top Of The Game
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 have been fully underwritten and signed off by our mortgage underwriters. All pre-approved borrowers of Gustan Cho Associates will close 100% as long as the property appraises out.
Solid Full TBD Underwriting Pre-Approval
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
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 the mortgage lender 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
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 mortgage company licensed in multiple states with no lender overlays on government and conventional loans, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected] Gustan Cho Associates are also experts on non-QM and alternative financing mortgage loan programs. All of our pre-approvals at Gustan Cho Associates are a full mortgage loan credit approvals and have been fully underwritten and signed by our mortgage underwriters.