The market is crazy these days! According to The Cromford Report, there are 14% fewer homes in the market this January as opposed to the same time last year. The report also showed that we have the same number of pre-qualified borrowers as last year, which means it will be harder for buyers to get their purchase offers to be accepted due to more competition.
Now, do not get discouraged if you are a buyer in this type of market, as thousands of people are still able to purchase homes. Here are a few awesome tips on how to stand out in this sellers’ market.
1.Get pre-approved – If possible use a reputable local lender who answers the phone and will reach out to the listing agent on your behalf. Here’s a crucial detail: Agents hate chasing lenders for updates and dealing with larger national banks can sometimes increase the length of your escrow. Why? They are dealing with hundreds of loans at one time and have several different departments working on your file. In addition, they are unfamiliar with state-specific forms, which can create delays in getting your offers accepted.
Using reputable local lenders is important because they understand the local market, property taxes and customary fees involved in a transaction. Plus, they are familiar with state-specific forms and contractually required updates (in Arizona these are known as a Loan Status Updates and Prequalification forms).
Also, make sure your loan officer is available during weekends and evenings. I know this may sound like a large request, but in this competitive market, you have to go above and beyond. Believe it or not many deals are put together outside of business hours. Having a loan officer answer questions about the strength of your loan file, the close of escrow and closing costs is a huge plus when sellers are reviewing offers. *** NOTE: Loan officers are not allowed to discuss personal financial information, such as credit score, assets or income, but we can confirm that you have provided all of your documentation, and say things like, i.e., they have a strong credit profile and are not receiving gift funds to qualify, etc.)
If you are new to this process, the difference between a pre-approval and a pre-qualification is that in a pre-approval, you take extra steps to provide supporting financial documentation and your mortgage company runs the financials through the automated underwriting systems and generates a preliminary approval.
For your information, we reach out to all of the potential listing agents by phone or email and provide the following cover letter for all of our pre-approved clients. We guarantee bi-weekly updates to them and to their sellers and have a proven record of success in our marketplace. Last year, our team ranked 59th in the nation for most purchase loans closed and we are the top three teams in Arizona. Our pre-approvals go a long way. To get started on your pre-qualification, please start here.
2.Write a personal letter – Houses have a lot of sentimental value for sellers. For many of them, this is the home they raised their families in and when you can connect on a personal level, this could be the tipping point between your offer and another. Some tips for writing this type of letter: Explain what you love about the home and how you can see your family growing up there. Include features about the home you noticed and how it is different from the others. You may want to include details about your home search, especially if you have been looking for a while. Also include details about timing urgency, like expecting a new child, or this home being in the perfect school district and you need to get in for a special program, etc. The more personalized detail you can add, the better. And remember to pay honor to the home and to the sellers. Everyone loves compliments 🙂
3.Try to remove as many contingencies as possible –This one might be difficult depending on your approval, but try to remove as many barriers as possible. If you have a home to sell, see if you can qualify for both properties and a smaller down payment, and then apply a *principle reduction after you sell your home. *** Many direct lenders like Guild offer recasting and mortgage insurance termination after closing, which can help you get the ideal program and payment you are looking for without refinancing. ***Please call for qualifying and program details on this.) Try not to request seller concessions or credits toward closing costs. This has a negative impact on the seller’s net profits. Instead, speak to your lender about a potential credit or look into programs that will git you funds for closing and down payment. There are many different programs in Arizona, i.e., Home in Five, Home Plus and Guilds 1% down program. You want to show the seller that your offer is the most profitable!
4.Quick Close of escrow–Most loans are taking 30 to 45 days for a close of escrow. Anything you can do to shorten this time is super helpful to a seller who may need this sale to go through to purchase a new home. To speed things up, be super responsive to your loan officer. Try to provide requested documentation no later than 24 hours after the request – same day, if possible. They will always need your most recent 30 days paycheck stubs and bank statements, even if you provided them during the pre-approval process. Try to document any large deposits that are not from payroll (you will need to provide deposit images and potentially write a letter). In addition, shop for homeowners insurance and be able to provide this information as soon as you are under contract.
*** Also, some lenders like Guild are able to submit your loan into underwriting prior to you receiving a contract. If you have a conditional loan approval before you are under contract this could shave one to two weeks off of your closing!!! Not to mention give your seller that extra comfort of your strong buying power!
5.Offer the seller an on-time close guarantee– Offering the seller a guarantee on your closing is also a huge difference maker. A couple of ways to do this include making your earnest money non-refundable. This comes at some risk so be sure to discuss with your real estate agent. The second way is to offer to pay a per diem cost if your loan closes late due to lender/buyer delays. Typically, we see $50 to $100 per late closing day. Lastly, you can also work with a company or lending team that provides a guarantee. Guild provides an on-time close guarantee to both the buyers and sellers of the loan if it closes late due to lender delays. This helps the seller know that we all have skin in the game. It’s that extra assurance that will separate you from your buying competition.
I hope these 5 tips were helpful! Remember that most people will not go through the effort, and one of these items can be the tipping point between an offer accepted on your dream home and the sellers going with another buyer. If there is anything my team and I can do to help you on your home-buying journey, please just let us know. We are always honored and happy to help you! If you want to get started today please visit here.
Best of luck and Happy House Hunting!