Here in Cincinnati, home inventory remains low and is moving fast, which has often led to bidding wars among would-be homebuyers.
It is important that sellers know you are serious when it’s time to make an offer and how you finance your home can help you stand out from the competition.
Check out these strategies to strengthen your offer and increase the likelihood of it being accepted:
- Obtain pre-approval before making an offer on a home.
In a seller’s market, it is common to have multiple offers on the same home, sometimes within hours of it hitting the market. Without a pre-approval letter, the chances of your offer being accepted will drop drastically, if your offer is even considered at all.
To prove that you can afford the home, obtaining a mortgage pre-approval is important to do before you find your dream home. That way, you are ready to make an offer the minute you find it!
Cash offers are seen as less risky to sellers because it means that you already have the money in the bank. Other offers are contingent on the buyer securing a loan from a lender, which could potentially fall through: the key is finding a lender that removes that risk.
At Guaranteed Rate, we put in the extra effort up front to verify your financial details and documents so we can confirm exactly how much money you are approved to borrow.
This gives you the certainty and confidence of a cash buyer because it means that we’ve already verified your finances.
Don’t forget: getting pre-qualified for a loan is not the same as getting pre-approved. Getting pre-approved requires a lender backing your offer and running your financials to determine a specific loan amount you are approved to borrow unlike pre-qualification, which is an estimate.
- Waive the appraisal contingency.
The less contingencies that your offer contains, the stronger it is, which is why your offer will stand out if you are able to waive the appraisal contingency.
Before determining to move forward with this strategy, you should look at your personal financial status to see if waiving the appraisal contingency is something you could consider. An appraisal contingency allows you to lower your offer or drop out of the deal before closing if the property valuation does not appraise at what you offered to pay for it.
While not as risky as waiving inspections or putting an offer on a property as-is, site unseen, you are agreeing that you will pay the different out of pocket between what you offered and what the property is valued at, if those values are not the same. If you have truly found your forever home and have the financial flexibility, it is a smart way to strengthen your offer because you are indicating your intention to bring money to the table if the home does not appraise for what you offered.
This is a popular option in neighborhoods that are experiencing a resurgence in property values and may not have the necessary comps to support an appraised value of what you are willing to offer – just make sure to confirm you are in a strong financial position to take this risk.
- Work with a local, reputable lender.
Another way to strengthen your offer is to submit your mortgage pre-approval from a reputable, local lender. This eliminates any doubt in the mind of the seller that may be caused by a pre-approval from an out-of-town or generic lender. In a multiple offer situation, sellers may disregard offers from buyers who are pre-approved by an internet lender. Working with a local lender gives the seller the confidence to believe your pre-approval is solid and there will be no complications with closing.
Having a letter from a respected, local lender may beat out a vague letter from a less-recognizable institution. Reputation matters: having a trusted, local lender could very well be the difference between sealing the deal or losing your dream home.
Local lenders also know the market in your area better than an out-of-town institution, meaning we have a depth of understanding surrounding the local economy and property values. When you work with a local lender, you have a designated, licensed loan officer and team of professionals that are experts in the region and available to meet whenever you need.
To help increase your chances of your offer being accepted, bring your lender to the table: at Guaranteed Rate, we fund and originate all of our loans in-house so our loan consultants, underwriters, and closing agents are always available to answer any questions and make sure the closing process goes smoothly.
We are also happy to go the extra mile ad reach out to the listing agent on your behalf when you submit the offer, which helps increase the confidence in the strength of your offer that you will close without any problems.
While these may seem like small details, they can go a long way establishing that you are a serious buyer with the financial capabilities of meeting your offer’s obligations.
Now more than ever, it’s imperative that your real estate offer stands out from the rest. Put yourself on the fast track to homeownership by talking with a lender from Guaranteed Rate about your mortgage needs. A dedicated mortgage expert will walk you through the pre-approval process and customize a loan just for you.
