If you're in the market to buy a home, you may have noticed that the real estate inventory is very low.
All across the country, it's the same story. You just aren't seeing as many "For Sale" signs in neighborhoods.
That makes it particularly difficult for buyers for one very big reason.
Attractive homes in desirable neighborhoods are garnering multiple offers. Many homes are selling above the listing price!
With fierce competition for homes, you want to be as prepared as possible. And you want to stand out from the other multiple buyers. Here's how you do exactly that.
Getting mortgage pre-approval from a lender is the best way to strengthen your offer. You'll need to provide documentation to prove your income. And you'll need to give your lender permission to pull your credit.
This will help your lender determine your mortgage money eligibility. Once you get a pre-approval letter stating the size of the loan for which you're eligible, this works strongly in your favor with a seller.
They know there is less of a chance that the financing will fall through.
Make A Reasonable Offer
Lowball offers will get you nowhere especially in a seller's market. With other buyers competing for the same property, now is the time to shine! Put your best offer forward or risk bruising the ego of the seller, costing you the home you'd really like to have.
Contingencies give you the opportunity to walk away from a real estate sale. A home inspection is a valuable contingency and should always be kept in a contract.
However, selling your home first should not be a contingency. Most sellers will almost always choose a contract without this contingency.
Include an Escalation Clause
To create the strongest offer, include an escalation clause. This allows the buyer to make an offer that's less than the asking price. But it also gives them a change to boost it if other buyers bid higher.
For example, if you make an offer on a $300,000 home of $280,000. The escalation clause could say that you are willing to raise your offer by $1,000 more than any other higher bid. You can also put a limit on how high you're willing to go.
Budget Closing Costs
Don't expect the seller to shoulder your closing costs. Some may, but in the current market, don't count on it. Expect to pay between 2%-7%. So budget for it!
Agree to Move-In Dates
Buyers who give the cleanest, easiest offers often win out. If your seller wants a specific move-in date but it isn't ideal for you, consider agreeing to it anyway.
Yes, you may have to make a bit of a sacrifice, but showing you can be flexible will give you an advantage.
Don't Make Big Purchases Before You Close
Once you have a signed contract, your loan still needs to go to an underwriter before you can obtain a mortgage.
Underwriters look at your credit score from three major credit bureaus, TransUnion, Experion, and Equifax. They want to make sure your credit hasn't changed since you were first pre-approved.
This is why you want to avoid making any larger purchases that cause you to acquire more debt. Not only can it hurt your credit score, but it can cause your mortgage application to be rejected.
Finally, we would be remiss in not encouraging you to get title insurance on your new purchase. Lenders require that you buy it for them, but it does not protect you.
That's why making a one-time purchase of homeowner title insurance is a good idea. It covers fraud, forgery, spousal claims, undisclosed heirs, and more. It can save you a world of heartache!
To learn more about Lilly Title & Settlement and the benefits of title insurance, visit us on the web.