Suggestions to Strengthen Your Offer on a House Series: Part 1

03.16.2021_Blog Image

Part 1: Work with a local lender to understand loan programs and what you may qualify for. Co-authored by Jennie Kussart of Re/Max Aspire

Check out these 4 suggestions that can strengthen your offer on your home. Beneath each suggestion, you can find details from both the realtor and mortgage lender side of things.

1. If you can qualify for both housing payments, avoid making the offer contingent on the sale of your current home.

Jennie, REALTOR®: If you submit an offer that is contingent upon the sale of your current home, prior to the purchase of the new home, your offer will be considered less competitive. The listing agent and the seller will see this as a potential added layer of risk. If something were to happen with the sale of your current home, then you impact the seller’s ability to sell you their current home. This could result in the seller not being able to purchase their new home.
Kait, Mortgage Lender: To be able to do this, you need to work with your lender to ensure that you can qualify for the payments of both homes. Some borrowers are able to do this, and some are not. It is important to know this information prior to submitting any offer on a new home.

2. Choose the best and most competitive loan program you may qualify for.

Jennie, REALTOR®:Whether an offer is Conventional, FHA, VA, or USDA, at this stage, nomatter which loan program is listed on the pre-approval letter, the borrower is qualified for the purchase of that home for the program specified. The difference is the requirements in place for each loan type in order to get the loan closed. When advising sellers on multiple offers, our job as the agent is to explain if there are any additional costs (for example, the seller must pay for a termite report on a VA loan) or any additional inspections that will be required by the lender to get the loan to settlement. Other factors will play into the decision of which offer the seller accepts, but choosing a loan program with less requirements can be a positive.
Kait, Mortgage Lender: We tend to experience listing agents sometimes thinking that FHA, VA, and USDA offers are not as strong as Conventional offers. In the mortgage business, there is not a “one size fits all” approach. Different loan programs can prove beneficial to different borrowers based on their unique financial situations. It is important to understand what you, as the buyer, may qualify for and the differences, benefits, and drawbacks between any of the programs you may qualify for. It is especially important to look at short-term and long-term costs and savings between each option.

3. If you can qualify without it, avoid down payment assistance.

Jennie, REALTOR®: An offer with down payment assistance will not typically be perceived as competitive as an offer without it. This is because down payment assistance loans usually take a bit longer to close. Also, if for some reason that borrower is unable to receive the down payment assistance, they most likely will not be able to purchase the home on their own without it.
Kait, Mortgage Lender: Down payment assistance loans typically take us longer to close. This is because whoever is providing the down payment assistance also wants to review the loan to ensure that it meets all of their requirements. Different down payment assistance options have different requirements in regard to how or if the down payment assistance is repaid. Some programs do not require repayment, some require repayment monthly, and some defer the repayment until the home is sold or refinanced. Some of the most common differences I see between down payment assistance programs are the following: how much money the borrower would need to put into the transaction, how much money the borrower is allowed to have after the purchase of the home, how much money the household can make in relation to the number of people living there, etc. Additionally, some of these programs have limited funds and can run out of funds from time to time. Most of the borrowers we speak to who are inquiring about these programs do not have the funds to purchase a home without the down payment assistance.

4. Work with a local lender.

Jennie, REALTOR®: The loan officer and company you choose to work with can matter. We cannot persuade sellers to accept an offer, but we are able to offer insight and information. If the company is local and the agent has had good experiences with them or the loan officer in the past, that is information that can be shared and considered. Additionally, local lenders tend to be easier to get in touch with. If the loan officer reaches out proactively about the offer to the listing agent, that is saving the listing agent from having to do that themselves. It is important to reach out to the lenders as a listing agent to ensure that they have done their due diligence.
Kait, Mortgage Lender: Having a loan officer that proactively calls the listing agent to introduce themselves and let the listing agent know they have done their due diligence (pulled credit, reviewed financial documents, etc.) can make a big difference. Local lenders also tend to better know the areas that the buyers are considering purchasing in and tend to qualify them a bit better because of that. For example, when buying in Columbia, MD, there are many areas that are subject to the Columbia Association fee. Many times, that is not made apparent on the listing information. The addition of this cost could make the difference between a borrower qualifying for a home or not qualifying for a home.

Inventory is at an all-time low. Getting your offer accepted has never been more competitive. Having a local and experienced team working with you is imperative when trying to buy the home of your dreams. Please reach out to us if there is any way we can help you!