In today's real estate market, we often find ourselves in situations where homes are coming on the market one day and having multiple offers the next. It is extremely stressful for buyers who need to move in a certain period of time and sometimes buyers think the solution to the problem is to raise the price of their offer. This can create other issues (i.e. appraisal problems), and often times there are other aspects of the offer that sellers will look at when making a decision. Here we will take a look at some of the things sellers will look at when determining the strength of an offer.
Cash Vs Financing
This first one is pretty intuitive, but I figured I would mention it anyway. A cash offer will always entice a buyer more than any financed offer. There is not a third party who needs to approve the purchase. Cash buyers do not require bank approval, which will also include appraisals, inspections, and underwriting. Any of these can cause a deal to fall apart.
Pre-qualification Vs Pre-approval
It is highly recommended that any offer be submitted with some sort documentation proving that you can pay for your purchase. In the case of a financed offer, this would be either a pre-qualification or pre-approval from a bank. Having a pre-approval to accompany your offer is stronger than a pre-qualification. A pre-approval has already gone through preliminary underwriting and the bank has already examined your financial documents as opposed to just taking your word for it.
Also, who your documentation comes from is equally important. A local bank who local market experts have worked with in the past will carry more weight than one from a national bank. The larger banks are notorious for being difficult to get in touch with during the lending process and not closing on time. Agents know this and advise their clients to these issues.
Pre-qualifications and pre-approvals are not binding. The lender may not like it, but you can choose to use a different lender for the actual purchase. Shopping around for the best rate or a lender that works for you is always in your best interest.
Financing Type
The type of financing also comes into play with the strength of your offer. Conventional loans are typically the favored type of financing. These are usually your stronger buyers who are more likely to close. The other drawback of FHA and VA financing is that they have additional inspections and appraisals that can sometimes delay or halt a deal.
Contingencies
When your offer contains a contingency for another event to occur in order for your purchase to go through, this makes it less attractive to the seller. The most common is a financing contingency, which everyone will have unless you pay cash. Another common contingency is the sale of your existing home. This gives first time buyers and investors an advantage over those who currently have a home that needs to be sold. If you do have a home that needs to be sold, talk to your lender and see if it is possible to qualify without that contingency. It may be a stretch to carry financing and make payments on multiple properties, but it may be worth it for a short period if it means getting your dream home.
Timing
Most buyers think that the seller will want to close as fast as possible, however this is not always the case. Sometimes sellers want to delay a closing in order to line up with their next home purchase or maybe even the end of school for their children. If you are flexible as a buyer, it is important that you have your agent contact the listing agent to see if there is a preferred closing for the seller.
So, as you can see, the final purchase price, while important to a seller, may not be the most important aspect of the purchase. Always be sure to align yourself with a Realtor® who can negotiate on your behalf and give you the best chance of creating a win-win situation for you and the other side of the transaction, whether you are a buyer or seller.
If you have any questions about buying, selling, or investing, I am always available to help. Don't hesitate to contact me!
No comments:
Post a Comment