There was a time where there were tons of inventory of homes on the market. Home buyers can ask for multiple showings on the same property they saw weeks ago and the home was still available. As the days turned into weeks and weeks turned into months, home sellers were dropping the asking price of their homes. However, those days are long gone. One of my specialties in the mortgage business is to help borrowers with credit issues or higher debt to income ratios get a home loan with bad credit. Sometimes it may take me weeks and the weeks may turn into months in helping home buyers qualified for a mortgage loan so they are solidly pre-approved. Once they get pre-approved, they get that long awaited pre-approval letter they have long awaited for. Unfortunately, when they go shopping for their dream home, they encounter multiple offers. Many homes are selling over the list price and other homes are being bought by cash buyers or home buyers with no mortgage contingencies.
Pre-Plan Your Home Purchase
After you get a pre-approval, consult with several realtors and choose a realtor you feel comfortable with. You need a realtor that you can get along with and have similar interests. Ask your mortgage loan originator for a realtor to recommend. I deal with the best of the best realtors in the industry and the realtors I deal with are professionals who really care for their clients and are available 7 days a week. If you need a realtor referral in Illinois, Florida, California, Washington, Indiana, Michigan, Georgia, Texas, or Wisconsin, contact me at www.gustancho.com or call me at 262-716-8151.
Your Real Estate Agent
Your real estate agent will interview you and ask you what type of home style you like, the area you are looking to live in, the square footage, ammenities, price range, lot size, age of home, and other qualities that appeal to you. Your real estate agent will then go to work for you and research homes that he or she feels might suit you. Your real estate agent will most likely email you the listings and specs of the home and you and your spouse can go over the listings and pin point the homes that you will like to research further and visit. When you visit a home to your liking, your realtor will tell you whether the home is fairly priced and what you should offer. If there are potential other offers, your realtor will notify the sellers agent and will guide you on how to present a strong offer and try to have the winning bid
It is a sellers market and home buyers should expect multiple offers when shopping for a home. Sometimes there will be more than a dozen offers on one property in a sellers market. If you encounter a home that you like in a sellers market, I strongly recommend that you at least write an initial purchase offer on the property.
What makes your purchase offer different than the rest
There are ways that your purchase offer will stick out more so than any other purchase offers. Sellers will not necessarily go with the highest offer unless the offer is a cash offer and an appraisal is not required. Most of home buyers will need a mortgage so no matter how much a seller wants for the property and no matter how much a home buyer is willing to pay, if the home cannot appraise, the high price doesn’t matter unless the home buyer is willing to pay above the appraised value and has the cash to come up with the premium.
A substantial large earnest money will show strength. Earnest money is refundable but if you can offer a $5,000 earnest money deposit versus a $500 earnest money deposit, it will mean a lot for the home seller and show the sellers that you are serious about closing on the home and prove to them that you are serious about buying the home.
Present the sellers through your realtor that you have a solid pre-approval from a mortgage lender and not just a pre-qualification. Also, tell the sellers that you are willing to work with them by giving them time to move. You can also offer the home sellers a few days to move after closing without any compensation.
Real estate regulations mandate that you have 10 days from the acceptance contract signed date for home inspections. You can decide to waive or eliminate contigencies such as repairs where you will take the property on an as is condition. If the appraiser comes back with minor repairs needed, you can offer the sellers that you will be responsible for the cost of the repairs as long as the sellers will grant access.
If you know that the home will have multiple offers, it might be wise to write your best possible offer or write the offer of the asking price. Depending on how hot the property is, you may consult with your realtor and offer slightly higher than the asking price, depending on how bad you want the property.
If you really want the winning bid for the property and have the means to come up with the difference in the event if the property does not appraise out, you can eliminate the appraisal contingency and write on the contract that you will come up with the difference between the purchase price and the appraised value if the property does not appraise out. This contingency elimination is huge and may be the key to get the winning bid to purchase the subject property.