It’s a seller’s market and when you’ve found a home you love, the unfortunate reality is another potential buyer has likely fallen in love too. So, how do you make your offer really stand out in a bidding war? It all starts with a winning strategy. Here are some quick tips to help you get home in that bidding war:
1. Get prequalified before you start looking
You should be prequalified, letter in hand, before shopping for a new home. Work with a loan originator who is reputable. A great resource to ask is your real estate agent! They know who gets loans to the closing table on time. Most real estate agents would agree they prefer working with a loan originator that is local (whether you’re buying or selling a home) who they already have a relationship with.
2. Know how your loan type could affect your offer
The type of loan that you qualify for can affect whether or not it gets accepted over other offers. For example, a conventional loan may be preferred by a seller over an FHA loan simply because an FHA appraisal may have more rigid criteria than a conventional appraisal. Same goes for a USDA loan, with an added step for USDA approval through the local office.
That being said, government loans are still a great tool for borrowers who cannot qualify for conventional loans. Just know that if there are multiple offers, the conventional loan offer could win out.
It’s common for buyers to ask the seller to pay most, if not all, of their closing costs and prepaid items, like seller concessions. However, asking the seller to pay these could knock your offer out of the running if someone else is not requesting the same.
Keep this in mind as you consider your options, and whether or not you can afford your down payment plus the closing costs and prepaids associated with closing your loan. A loan originator can help you keep your closing costs low by adjusting the rate to include lender credits so that you’re asking for less from the seller in a bidding war.
4. Be flexible and ready to compromise
If you have found the home of your dreams and know that you simply cannot stand to walk away, be ready to compromise. For example, don’t expect to offer a lower purchase price AND ask the seller to pay your closing costs and prepaid items. If you don’t have the funds to pay all of your closing costs and prepaids, then offer full price or even more. And when you offer more, understand that the home still must appraise.
5. Create your own homebuying dream team
Partnerships between realtors, loan originators and title companies are common place in the real estate and mortgage world. If your first stop is with your loan originator, ask them who they recommend as a realtor, and even who they might recommend as a title company. Remember, they work day in and day out with these professionals. They know who they can count on to help you close in the most efficient way possible.
It’s important to choose professionals you feel you can trust through the homebuying process. Loan originators, realtors and title agents know their markets and they know each other. These relationships provide unparalleled value, especially when you’re purchasing the home of your dreams and gives you the ammunition you need to win that bidding war.
Guest Blog: By Karma Herzfeld, Loan Originator, Motto Mortgage Alliance
Published on September 27, 2019
