Month: May 2021

In order to land the home of your dreams, it’s important you understand how to make a viable offer. This is especially important in a competitive market like the seller’s market we are currently in. Here are some tips for making a competitive offer on a home.

Get Pre-Qualified

Getting pre-qualified is one of the most powerful things you can do when it comes to showing a seller you are serious. A pre-qualification estimates how much you can afford to borrow from a lender which helps you better explore loan options and narrow your home search down to a realistic price range. Being pre-qualified for a mortgage signals to a seller that you have consulted with a lender and are confident that you will be able to secure funding.

Offer Earnest Money

Earnest money, or a good faith deposit, is put down prior to closing with the purpose of showing a seller that you’re serious about buying. In some cases it is required but even if it isn’t, putting it down anyway may help make your offer more competitive. Earnest money basically protects the seller in case the buyer backs out of the sale. The value varies but is typically somewhere around 1% to 3% of the home price and is typically kept in escrow until closing. If the deal goes through as planned, the earnest money goes towards the price of the home. The seller usually gets to keep the earnest money if the buyer breaks the terms of the purchase agreement. This is to say there is some risk for a buyer in putting down earnest money, but the risk is very minimal if you are truly serious about buying the home.

Be Smart with Contingencies

Contingencies are things that must happen before the home sale is able to move forward. Some common contingencies include ones regarding financing, appraisal, inspection, and home sale. Buyer contingencies are put in place to protect your interests but may also act as a barrier to making a deal; the more buyer contingencies there are, the more risk there is of the sale ultimately falling through for the seller, so having too many contingencies may make your offer less desirable—especially in a competitive market. If a contingency is in your best interest, by all means include it, but try sticking only to contingencies that are truly necessary.

Establish a Rapport with the Seller

When a seller is flooded with financially comparable offers, sometimes the choice comes down to emotion. Think about including a letter to the seller to go along with your offer. Your real estate agent may be able to share some background about the seller with you so you can establish common ground. Tell them a bit about yourself and explain what you love about their home and neighborhood. If you’ve made a strong offer financially, this level of personalization may very well be the defining factor that will allow you to stand out among the rest.

Are you ready to get serious about homebuying? Consult one of our qualified Loan Officers today to explore your mortgage options!

We are in the midst of a booming seller’s market. In real estate, a seller’s market occurs when the demand for homes is greater than the supply. This is the inverse of what happens in a buyer’s market, which is when there is plenty of supply but not as much demand for houses. As the name suggests, a seller’s market is great for sellers but can be difficult to navigate as a buyer. Here are some tips for buying a home in a seller’s market.

Get Prequalified

Getting prequalified for a mortgage is incredibly important in showing sellers you are serious about buying. Prequalification is an estimate of how much you can afford to borrow from a lender, allowing you to explore specific loan options fitting your financial situation. Knowing that you have talked to a lender and been prequalified shows a seller that you will actually be able to secure a mortgage and therefore are serious about your interest and offer. Prequalification also helps you in your home search as it allows you to set a realistic budget so you don’t waste time going after homes that cost more than you’re able to afford.

Work with a Knowledgeable Real Estate Agent

You always want to work with a savvy agent when buying a home, but it’s especially important when searching in a seller’s market. You need to choose someone who is fast to communicate both with you and on your behalf to others. It’s also in your best interest to choose someone who has knowledge about and experience in the neighborhoods you’re looking to buy in. In some cases, your agent can even offer insight into upcoming inventory which can give you an edge in securing a home as soon as it hits the market.

Stick to a Budget

When a bidding war starts—which is likely in a seller’s market—it can be easy to get carried away. When starting your home search, set a strict limit on how much you’re willing and able to spend on a home. Exceeding your price limit may get you into the home you want, but it can (and often will) cause financial stress and hardship in the future, so it’s important to consider the ramifications of going outside your budget. Look at the bigger picture, like how much the home is actually worth and what kind of payments you can truly afford.

Give Your Best Offer

A seller’s market is not the time to go in with lowball offers. It is common in a seller’s market to see homes go for above asking, sometimes considerably so. Work with your agent to determine what a strong, realistic offer is going to look like for a given property. Be prepared for bidding wars to break out.

Temper Your Expectations

When inventory is limited as it is in a seller’s market, the “perfect” home may not come on the market when you’re looking—and even if it does, there’s no guarantee you’ll be the one to buy it. As the saying goes, beggars can’t be choosers, and in a seller’s market, you can’t be too choosy. This isn’t to say you should sacrifice your list of must-haves, but make exceptions to things that can be changed. For example, you can always add on or renovate in the future, but you can’t change the home’s lot size or location. It’s also not the best time to ask for add-ons in your offer, like inclusions or requesting updates be made. In a seller’s market, the seller has the power, so buyers should seek to be as flexible as possible.

Personalize Your Offer

In a seller’s market, sellers are often faced with multiple offers at once. Sometimes, it’s the little things that can make a difference. Consider writing a letter to the seller to go with your offer. Share a little about yourself and explain what you love about the home. This is your chance to appeal to their emotions, not their bank account. Keep it short and sweet and be sure to say thank you. If your offer is one of two comparable bids, this level of added personalization may make yours stand out to a seller.

Are you ready to take on the challenge of buying in a seller’s market? Talk to one of our experienced Loan Officers today to learn more about your mortgage options!