The big mistake many people make when choosing their home buying team is the belief that everyone offers the same thing. They trust their process is similar to their competition’s when placing offers and ultimately losing out to offers that, in the end, can’t be much different than theirs. Or can they? If a seller receives 5 offers that are all very similar, what are the winning buyers doing that push their offer over the top? Does your preapproval match up with the rest?
In this article, I have included many such things that can put your offer on the top of the list while leaving other buyers wondering how you beat them out.
Fully Underwritten Approvals
This is a massive step in the process that inexperienced agents and buyers overlook for various reasons. Some don’t know it exists because their lender doesn’t offer it and some haven’t been taught the real value of this process, but it’s first on my list for a reason.
There is a profound difference in quality between prequalification letters written by Loan Officers and preapprovals written by Underwriters. This is especially true from the view point of a seller and an experienced Real Estate Agent. Preapprovals written by Underwriters have been reviewed more thoroughly, and have been approved by the only person that matters in the approval process. Loan Officers don’t approve loans. Underwriters do. When our borrowers go through underwriting before they place an offer, we call them Certified Home buyers. More on than later in the article though.
When a potential offer can show an underwriter’s signature on their approval, they show the seller:
- Their offer poses less risk than the competing prequalifications.
- They can close faster because most of their documents have already been reviewed.
- The only items left to be approved is the property being sold.
This is a vital part in the process to get your offers accepted. No matter how qualified you think you are, it’s about how qualified the seller believes you are. I have seen lower credit score FHA borrowers beat out high score conventional borrowers because the sellers believed they were more qualified. They were because they decided to take their approval more seriously.
A Guarantee From The Lender
Remember when I said we had a special name for anyone that get through the underwriting process before they place an offer? Yes, we called them Certified Home Buyers. We do this because these buyers are “more approved” than the others like described above. Why call them the same thing when they are light years apart? As a mortgage lender, we feel it is our responsibility to do our part to differentiate these buyers as best as we can.
That’s why we put our money where are mouth is when backing up our Certified Home Buyers. For every client that gets a Certified Home Buyer certificate, we back up their offer with a $5000 guarantee to the seller. This is just another bullet in the buyer’s proverbial chamber and another reason not all offers are as equal as they seem. Add this to the list in a paragraph above as to why our clients see their offers get accepted quicker than the average home buyer. What breeds confidence in your offer better than the lender putting their money where their mouth is.
- Confident lender backs up their approval with a $5k guarantee.
Contingencies And What You Should Or Shouldn’t Remove
Contingencies are clauses in a contract that let the buyer out of the contract and allow them to receive their earnest money back. A few that incredibly important to the buyer are property inspections and appraisal values. However, if you anticipating putting 10% down or more, you might remove the appraisal contingency knowing you can put less down to cover the overage if the value comes in low. If you aren’t comfortable removing the appraisal contingency all together, there is another tactic that works incredibly well that brings less risk to the transaction. We have had buyers offer $1000 over the appraised value if indeed it comes in lower. In this instance, this only triggers if the value doesn’t meet the sales price.
Why would I pay over what a property is worth? This is a valid question and I’ll spend a little time on it.
The first reason is quite simple. You are competing with other offers for this property. If the seller is at all concerned that the property will appraise for the offer price, you put yourself at a decided advantage by being the best offer by $1000. For example, let say there are 5 offers that will net the seller $325,000. 2 have a Certified Homebuyer Certificate from The Mark Sullivan Mortgage Team. We’ll add that the seller wanted this sales price even though their agent told them the home was probably only worth $315,000.
When the appraisal comes back, the value is at $320,000. In most cases, the seller knows they will have to renegotiate with the buyer and will likely need to lower the sales price to get the deal done. With your offer, the negotiation is already complete and the seller is already guaranteed that extra $1000 because of the tactic you used to get the deal. A property worth $320,000 is likely to appreciate close to $800/mo and you will have made that extra money back very quickly. The seller is guaranteed to make more from your offer if this scenario were to happen. Win/Win. Add another bullet to your chamber.
- Offer $1000 over appraised value.
Remember we are combining all of the strategies from previous paragraphs too, so your Certified Homebuyer Preapproval and your lender’s $5k guarantee all contributed to you getting this contract in the first place. These strategies could be the difference between placing 1-2 offers and placing 9-15 offers. Yes, I have had clients place more than 10 offers and miss on every single one. They are more than likely not taking the advice in this article though.
All Hands On Deck
Lastly, you need an “all hands on deck” approach to your offers. So far you have a fully underwritten preapproval, a $5k guarantee from your lender showing how confident they are in your offer, and maybe you have even offered $1000 over the eventual appraised value. What could be left? These things already mentioned as well as this last tactic will absolutely give you the best shot to get your offer accepted.
The “all hand on deck” approach is when your lender alongside your agent go to bat for you when your offer is placed. There is no better person to explain your strategies and why your offer is the best offer than your Loan Officer. Every time a client places an offer, I send an email and call the listing agent to make sure they fully understand the gravity of you qualifications to purchase this house. We explain:
- You are further along in the process because you are fully underwritten
- You pose less risk to the seller
- Our confidence in you is so high, we put our own money behind your offer
- You can close faster if needed
- Your offer is always the highest if the value comes in lower
Get pre-approved here – Online Application
Call The Mark Sullivan Team in at (615) 968-5338. You can always apply online at bit.ly/sullivanteam or applywithsully.com for any mortgage needs. We are available on the weekends as well. To schedule a call, visit Schedule A Meeting. We work hard to make it easy on you. Nobody gets lower rates on than The Mark Sullivan Team, why go anywhere else?