Tag Archives: mortgage

The Right Lender Can Help Win in a Situation with Multiple Offers

This is the final part of a three part serious on how to win in a situation with multiple offers. 

Reasons why NOT to use a big box lender in a multiple offer situation

In situations with multiple offers, if one buyer is getting a mortgage and another buyer is paying all cash, the seller may not necessarily accept the all cash offer. The goal of the seller is to sell the property. The seller, with the help of the seller’s agent, will want to accept the best offer to get to the closing table. I have already discussed the terms of an offer can win against multiple offers and how a Realtor can provide an advantage against multiple offers. However, if a buyer uses the wrong mortgage lender, it could cost time, money, and the home.

With a Variety of Mortgage Lenders, Having the Right One against Multiple Offers is a MustWhen I write “the wrong mortgage lender,” I don’t mean one lender is bad and to stay away. In a competitive market, where inventory is low, having a reliable, easily accessible mortgage lender can mean getting to the closing table. The low rates offered by big box lenders can be very attractive but the underwriting guidelines are strict and unyielding. By big box lenders, I mean Bank of America, Wells Fargo, Chase, etc. and other large banks who do not keep their loans in house. When a buyer gets a loan from one of these banks, the bank in turns sells the loan to Fannie Mae or Freddie Mac. In order to sell the loan, the loan has to follow certain guidelines. The process to follow these guidelines is painstakingly slow and, with larger mortgage lenders, buyers do not have one person handling every part of the mortgage process. Our buyers have used a variety of lenders but the smoothest transactions by far were when our buyers have used either Guaranteed Rate or First Republic. In fact, one deal was saved when Guaranteed Rate stepped in after Bank of America could not approve the loan.

Boutique Mortgage Lender Guaranteed Rate Can Help Win Against Multiple Offers

  • Underwriting

Due to the strict underwriting, big box lenders have had to delay a closing date for some buyers if the situation is unique in some way (not FHA approved, appraised lower than asking price, the buyer is self employed, or from out of the country, etc.). As I mentioned before, the seller’s goal is to sell the property and the seller’s agent will help sort through the offers to find the one to get to the closing table and offers the best terms. The seller’s agent and, in this age of information, the seller know big box lenders are more tedious to deal with. If another offer has an offer letter from a mortgage lender the seller’s agent and the seller know will get the job done, that offer will hold more weight.

  • Inflexible Processing Time

A buyer who submits an offer with flexible terms will be attractive to the seller. But in order for a buyer to have flexible terms, the buyer needs to know what options the lender can offer. With a lender such as Bank of America, a buyer would not be able to offer a closing date less than 6 weeks from acceptance.

  • No Waiving Mortgage Contingency Option

If the buyer wanted to use a larger lender, waiving the mortgage contingency would be an incredibly risky move on the buyer’s part. The property would not likely be able to be pre-approved by a larger lender prior to submitting an offer, so the buyer would have to hope the property is approved afterward which could take weeks and leave the buyer’s deposit vulnerable. Smaller mortgage lenders are more involved with the local community and know the real estate market specific to their area. This benefits the buyer because the lender will be able to anticipate any problems which could affect the loan or the lender will able to pre-approve a property in as fast as four days.

Situations with multiple offers may not continue to happen as consistently as is now the case, but rare and unique properties will always have more than one interested party. When a buyer has to have a certain property, who the buyer uses and what terms the buyer offers can make the property home.

Posted in Buy Property, Mortgage, Real Estate Sales Market, Real Estate Tips | Tagged , , , , , , , , | Leave a comment

3 Ways A Realtor Can Help You Win in a Situation with Multiple Offers

This is part two of a three part series on how to win in a situation with multiple offers. 

It’s not what you know, it’s who you know…. and what they know.

Many of the strategies I wrote about in the previous blog on how offer terms can help win a situation with multiple offers are only possible when the buyer has a good Realtor working on their behalf. A strong Realtor has a large vetted network of vendors in all aspects of a real estate purchase. From lenders and attorneys to painters and carpenters, a good Realtor has many qualified contacts able to put a buyer in the best position to buy a home. More importantly a strong Realtor has developed good relationships with other Realtors in the broker community.

  • Quiet Listings 

The Realtors behind Matthew and Alisa Group Real Estate Blog

Most sellers would prefer to have their property on the general market but few unique properties are shopped around quietly among brokers for reasons as simple as getting the right price, the sellers do no want the general public in their home, or the sellers does not want their neighbors to know they are moving. No matter the reason, the result is the same, a buyer needs to be in the know when a property becomes available. A good Realtor spends their time knowing the market conditions, the properties on the market, and the other agents working in the real estate sales market in the area and surrounding neighborhoods. So when a new listing is not going on the general market right away, selling agents will contact other trusted agents they know and have worked with to bring a buyer. Agents working for brokerages with deep connections in the community and many active agents will have further access to these quiet listings beyond their own personal network.

In extreme cases where a buyer must waive a mortgage contingency and/or an inspection contingency, advance knowledge or early access to a property can also allow the buyer the ability to have an inspection prior to submitting an offer or get the property approved by a lender before submitting an offer. Our team of Realtors does not believe a buyer should waive these contingencies unless protected. By getting our clients early access to properties we are able to offer them a competitive advantage while protecting their deposits.

  • Home Inspectors

As mentioned in the previous blog, expedited contingency dates and a short due diligence period can mean an accepted offer. Having a Realtor with a network of trusted inspectors means a buyer can offer an inspection date within two days of acceptance. With a list of multiple qualified inspectors to call, a buyer can almost always find an inspector available within two days.

  • Mortgage Lenders

When an offer has a mortgage contingency, a pre-approval letter must accompany the offer. In a multiple-offer situation, the decision can come down to what lender two particular buyers are using. When a buyer is using a big box lender, such as Bank of America, Wells Fargo, Chase, etc., their offer can be viewed less favorably because the arduous and inflexible underwriting can stall, delay, and even kill a deal after keeping the home off the market for two or more months. A seasoned listing agent will advise their client on the risks associated with taking an offer accompanied by a pre-approval letter from one of these lenders. Similar to the network of trusted home inspectors, Realtors have extensive networks of trusted mortgage lenders. Many Realtors have had to step in and advise a buyer to switch from a big box lender promising slightly lower rates to a mortgage lender known for getting to the closing table.

Working with a Realtor a buyer trusts is a key factor in any real estate transaction. However, a seller’s agent will not only look for the best terms for their client, but also the team the buyer has decided to use. Agents want to work with other proven agents because it assures their client the best chance of success. Using an agent unfamiliar with the area and the local customs of a transaction or an aunt who has her real estate license but has not sold a home in four years will not make an offer appear any stronger in a situation with multiple offers.

In the next post in this series, I will discuss how important the lender can be in a home purchase. Unless all buyers start buying property with cash, the lender a buyer uses can make or break a deal.

Posted in Buy Property, Real Estate Sales Market, Real Estate Tips, Realtor | Tagged , , , , , , , , , , , , , | Leave a comment

How to Win in a Situation with Multiple Offers: Terms

This is part one in a three part series on how to win in a situation with multiple offers.

It’s not all about the money.

In this real estate sales market, with very little inventory available, well-priced properties are getting multiple offers. This is true nation wide and can be intimidating to all types of buyers. From first time home buyers to seasoned home owners and investors, this market is fiercely competitive. Buyers who have been on the losing end of multiple offers, can make an aggressive over-priced offer which can create more burned buyers who feel they need to pay more to get the home they want.

If a buyer are working within a budget has found a home priced comfortably in the selected price range, how can an offer look attractive to a seller without significantly over bidding? An offer includes more than the price. The terms of the offer are incredibly important to a seller.

Before submitting an offer, a buyer should consider the following:

  • Flexible closing date

A flexible closing date shows the sellers the buyer wants to work with them to make their transition as smooth as possible. Some sellers have their next home already lined up and need to sell their first property before they can close on their next. So a quick close would be preferred. However, other sellers may have renovations planned and would prefer to have a later closing, allowing them to perform renovations prior to moving into the new property. If the buyer has the flexibility, make it know to the seller by putting it in the offer.

  • Quick contingency dates and due diligence period

How to Win Against Multiple OffersWhile the closing date may not need to be rushed, speeding up the dates for inspection and mortgage contingency will look positive to the seller. If a deal falls through, it will most likely be at the inspection stage. Because most failed deals fall through at this stage, it benefits both buyer and seller to shorten the due diligence period. If any problems do arise and the deal falls through, both parties are find out early in the process are are then free to move onto other options (the next buyer or the next home for sale).

  • Larger down payment or pay with all cash

A larger down payment or an all-cash offer means one thing to the seller, low risk. An all-cash offer means there will be no problems due to financing because the offer contains no mortgage contingency. A larger down payment looks better to a seller for the same reason as a bank, less risk. If a buyer puts in more of their own money, the less the bank has to lend. With a smaller loan amount the easier it should be to obtain a mortgage.

  • Escalating Clause

An escalating clause should only be used in a circumstance when the buyer must have a particular home and can afford to have an aggressive strategy. Adding an escalating clause means the buyer will offer  a certain amount ($1000 or $5000) over the highest offer the seller receives. The buyer can always cap the escalating clause at a certain amount to to minimize risk should another bidder be overly aggressive and offer far more than the home is worth. Keep in mind the escalating clause is a risky and aggressive strategy only to be used with much consideration.

Other ways buyers are attempting to set their offer apart include waiving the contingencies all together. We do not recommend waving contingencies to our buyers, however if a buyer is properly prepared it is possible to waive both the mortgage and inspection contingencies while still protecting a buyers interest.

  • Waiving the inspection contingency

If the buyer can have early access to a property,  the access can be used for more than a superficial look. A buyer may be able to schedule an inspection prior to submitting an offer. If the buyer is able to preform an inspection and is satisfied with the report, the buyer can submit an offer waiving the inspection contingency with confidence and no risk to the good-faith deposit.

  • Waiving the mortgage contingency

Waiving a mortgage contingency should only be done when the buyer has complete confidence in their financial means and in the lender. We would not recommend waiving the mortgage contingency unless the lender has pre-qualified the subject property. We work with lenders who can qualify a property within 4 days, however in most cases the buyer would need early access for this strategy to work.

Not all of these options are for everyone. If the property you are looking at is a highly desired property, one or more of these options could help you offer stand out among the multiple offers. Some of these strategies also require a buyer to have early access to the property before it is made available to the general public. In the next post in this series, I will discuss how a buyers choice of agent can position them to win a situation with multiple offers.

Posted in Buy Property, Real Estate Sales Market, Real Estate Tips | Tagged , , , , , , , , , , , , | Leave a comment