The real estate market is as tough as ever and getting any kind of edge over your competitors is great, no matter how small or superficial it may seem.
Any real estate agent knows that branding and personality shine in this buyer’s market. Of course, buyers also want a way to out-smart the circling of sharks when a good deal hits the market.
It’s good to have a creative, yet transparent offer so that the sellers are confident with the buyers ability to finance and close escrow.
Here are some tips to accomplish just that, and then some!
1. Make sure your loan approval letter verifies type of financing
Incorporate a credit approval letter with your offer that clarifies what kind of financing you are getting and how big of a down payment you are putting down. Make sure your loan approval letter contains the lenders contact information as well, so the seller and listing agent can call and verify the data.
In the event that you have met all requirements for conventional financing and can put a down payment of 20%, make a point to mention this on the loan approval letter, as this will, as a rule, make your offer more attractive than a lower down payment offer. On the chance that you are presenting a FHA or VA offer, and are putting 0-5% down,
See below… other ideas to help make your offer shine!
2. Craft a personal cover letter for your purchase offer
Adding a personal touch to your purchase offer will enable you to be more than just another name or offer. Include a cover letter that introduces your family and explains why you are the right candidate to purchase their home. Include a family picture, to put a face behind those names. You’ll be plucking those strings if the seller also has a family to care for.
3. Incorporate DU underwriting approval with purchase offer
A DU (desktop underwriting) approval is the point at which a purchaser’s application and credit report has been cleared, via Conventional, FHA or VA automated underwriting.
A DU underwriting approval shows the most vital data on a purchaser’s profile, which gives the seller & listing agent a much better feeling about the quality of the purchaser. Case in point, a DU approval shows a purchaser’s credit scores, debt to income, assets (where the down payment is coming from) and the loan program they were qualified for.
4. Give proof of funds for initial down payment
Always provide proof of your initial down payment along with your offer.
The bank statement, 401K, investment account should have the same name on it as the purchase offer. Furthermore, make sure there are sufficient funds in the account to cover the full down payment in the offer, along with closing costs.
In case you have a generous family member, who wants to provide a gift for your down payment (That’s OK) Just have them write a gift letter and show proof of funds from their bank account.
5. Use tact and be reasonable regarding repairs
Watch how many stipulations you ask for upfront.
For example, an initial purchase offer requesting a long list of repairs and a seller credit to pay for your closing costs will usually place your offer, behind another offer that doesn’t ask for any seller credit.
SOLUTION: To make your offer more competitive, the lender can pay for ALL the buyers closing costs with a lender credit.
How does that work? Simple, instead of taking a 3.875% 30 year fixed rate, just take a slightly higher rate of 4.25% instead, and then you would have a lender credit of roughly 2.5% of the loan amount, that could be used to pay ALL your closing costs.
Another trick is to offer to pay for the sellers “Owner’s Title Policy” and “Transfer Tax”, these fees amount to roughly $2,200 on a $300K loan. One more way to entice the seller to accept your offer. If the buyer doesn’t have the funds, we can also pay for those fees with a lender credit.
Regarding repairs, better to negotiate those after a home inspection or a lower appraised value.
6. Give a larger deposit
Want to show the listing agent and seller how serious your offer is? Consider putting down a larger chunk of your deposit. This may seem scary for some, but a large deposit shows you are invested in the success of this transaction. Tiny deposits, may make the seller feel that you are indecisive about the home.
As long as your loan approval is solid, putting a larger deposit down isn’t costing you any more, as the deposit goes towards the total down payment.
7. Close the Transaction Faster
Working with a lender who can help you to close faster is another way to entice the seller to accept your offer in this competitive market. For example, if your purchase offer is being reviewed with 2 others and your offer can close in 21 days, while the other 2 offers are 45 day and 60 days closings, many times the seller will take the fastest closing.
I hope you found these tips useful. I review offers every week with Realtor partners, which allows me to see the different types of offers that buyers are submitting in this current market. The majority of offers I review, usually only have 2-3 of these items provided above.
Full transparency is the key to getting an offer accepted these days. An offer that is presented in the clearest way, leaves a little room for flexibility and addresses any issues upfront, is typically the offer that will be picked!
Jackie Barikhan is a Senior Loan Officer with Right Choice Mortgage and has many options to close Conventional, FHA or VA Purchase Transactions in 21 days, and even 17 days if a major rush is required.
We have an outstanding team set up, dedicated to help close purchase transactions fast.
First Time Home Buyer Questions?? Just ask Jackie :-) 949-600-0944
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