In the current competitive environment of real estate, the highest paying bidder does not always win the deal. Instead, terms make a huge difference in closing a deal with the seller. In the United States, prices for home rents are going up and up which is why many people are rushing towards home ownership which has resulted in a hot real estate market where the home buying process appears to be filled with hurdles.
Even though it seems really difficult, but understanding what motivates a seller and how the process of negotiating a deal for home purchase works, can really make your offer stand out. This is where we can help you, Affiliated Mortgage helps its clients to compete and get an edge over the competition by making a strong case of their offer. Even if you do not have the best credit score and do not have a huge amount to pay upfront, we can help you to stand out among the pool of potential home buyers.
In order to help our buyers beat the competition, here is a checklist that potential home buyers should definitely follow through in order to purchase their dream home without losing in the competition.
- Get Pre-Approved before you start house hunting
This is the most important and impactful thing that you must do in order to stand out among the pool of potential home buyers. This gives the seller a sense of security that you will be able to pay the purchase price.
It also makes the seller believe that you are seriously interested in his home and are not wasting his time. Sellers are as exhausted as you are during this whole process, so they would bet on any offer that gets them the most profit with the least amount of hassle.
Many home buyers make the mistake of going in reverse, they first find a house and then apply for loan, which makes them lose the deal most of the time.
- Be prepared to move fast
In order to close the deal on your dream home, you have got to be faster than your rival home buyers. Do your research beforehand, and get your finances and application ready accordingly.
The best way to do this is to hire a local realtor, who can prepare you for what homes will be cost on the nearby areas. This way, when you will find your dream home, you will be able to make an appropriate offer quickly that can be taken seriously.
- Save more money than just the minimum down payment
If you have already get yourself pre-approved for a mortgage application and have hired a real estate agent, you must know by now what exactly you can afford, and how much you will need to save for a down payment.
But just don’t stop there, make sure that you save enough money to account for lender fees, appraisals, home inspections, taxes, and insurance. Otherwise, all of these payments will add up to your loan amount, and it will only increase the interest rate on your mortgage.
- Present it in person
With the advancement in technology, most of the people prefer only to fill up the online application and get done with the process. But there is nothing like meeting the seller in person and present yourself in a convincing way.
Tell the seller a little about yourself and present your offer in person, it might go farther than you think. The seller will know that you are serious about buying his property and will not back down in future. Presenting yourself in person can might be that one factor that makes you stand out from other potential buyers.
- Offer to pay as much of the closing costs as possible
Instead of just adding all the additional transactions to your mortgage, pay as much of the closing costs as possible. When the sellers are reviewing your offer, they go through section 7 which is allocation of costs to find out what they will have to pay for. Most of the items on the list are not too expensive, and it makes sense that if you want to stand out in a hot real estate market, you should contribute to these payments.
Discuss this with your agent and lender, and just don’t go with what is typically paid for.
- Earnest Money
Earnest money is a critical aspect of any transaction. Although, it is not required, but it plays an influential role in the home buying process. It informs the seller of your commitment to the respective deal and will also help in funding the down payment in case your offer gets accepted.
Although it is not mandatory, buyers are advised to always include an earnest money deposit in their offer, in case they truly intent on taking the deal. In case, your offer gets approved by the seller, this money deposit will contribute towards your down payment for the home. Otherwise, you can get your money back in most of the circumstances.
The amount you shall pay as your earnest money deposit vary from state to state, according to the policies and laws. But typically, you should expect to pay 1-2% of the total purchase price as earnest money.
- Make the seller’s life easy
In most cases, you don’t have to offer the highest price to win the deal. Instead, show the seller that you are serious about taking the deal by presenting yourself in person, scheduling a home inspection immediately, and showing a clean record.
You can also offer the seller an extra month of occupancy. A gesture like this can really go a long way and will show the seller that your offer might be the most convenient for him. Just remember, that sellers are also going through their own challenges, they will probably be looking for another house at the same time. So, at a time like this, offering them to take some extra time to make the transition can might work out in your own favor as well.
- Write a letter to the seller
It might sound rubbish, but this tactic works really well sometimes. If you know, there is a tough competition for the house you have your eyes on, and you have already tried everything else to sweeten your deal, writing a letter to your seller explaining why you want to purchase his house might touch the seller on a personal level and turns the table in your favor.
However, writing doesn’t mean that a good, high paying offer is not the winner. But often, there is a small margin of transactions between different offers of potential buyers, so a gesture like this might get you the edge that you need to win the deal.
We hope these tips and guides will help you beat the competition and get you your dream home without much hurdles.
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