September 27, 2021
Imagine finding the perfect house but because you weren’t properly prepared you lose your bid to another buyer. For things to go your way the seller must choose your offer over the others. But how do you do your best to make that happen? The first thing to know is that making an offer that the seller will accept requires having the right strategy. Here are seven suggestions for making that happen.
1. Find Your Home
Before you can make an offer on the perfect house you of course have to find it. Newrez has partnered with XOME to help you do just that.
With this intuitive home search tool with you can search for properties and create new listing alerts. You will also get neighborhood, school, and market trend information, as well as sign-up for alerts and be notified when property or market conditions change.
2. Determine Your Budget
Make sure to factor in your monthly expenses within a budget. Buyers need to have cash on hand for closing costs of approximately 2% to 5% of the purchase price, depending on which state you live in. Additionally, f your down payment is less than 20% of the purchase price, you will likely incur the extra expense of PMI insurance.
An effective method of calculating your homebuying budget is called the “28% Rule.” This means that your mortgage should not be more than 28% of your gross income each month, and no more than 36% of your income should be debt.
Use our Mortgage Calculator to help you determine how much house you can afford. This will help ensure that you’re firing on all cylinders when making your offer.
3. Get Pre-Approved or Pre-Qualified
A pre-qualification is a good indication of creditworthiness and the ability to borrow. By getting pre-qualified, you’ll get a better idea of what you might be able to borrow, and you’ll possess a solid understanding of your finances.
However, by taking the next step and getting pre-approved, you’re letting the seller know that you’re serious. Sellers will be more willing to negotiate with those who prove that they can obtain financing. Gaining pre-approval will give you a leg up on the competition when you make an offer because it will remove unnecessary delays.
4. Find a Real Estate Agent
A buyer’s agent can make or break the entire home-buying process. Your agent will play a big role in getting you the home you want for the price you need, therefore finding the right one for you is very important.
Ask potential agents how long they’ve lived and/or worked in the area where you’re looking at buying. If they grew up in the area, they’ll be a wealth of knowledge regarding neighborhoods, schools, and general insight.
A few other tips for finding the right agent include using trusted resources or referrals, checking the agent’s track record, interviewing at least three agents, and choosing a person that you like. A good local agent can help you with strategies that help you stand out, regardless of current market conditions.
5. Do Your Research
Doing your homework will always pay dividends. Researching comparable houses, selling prices, forecasts, and mortgage rates can all affect the price you pay for your home. If your offer ends up differing substantially from the asking price, consider including a letter summarizing the market conditions or comparative analysis that led to your offer. A well-intentioned letter will help the seller understand the quantifiable reasons behind your offer.
6. Find a Fallback or a double Fallback
Buying a home in today’s market will likely require you to make more than one offer. According to the Zillow Group Consumer Housing Trends Report 2021, “42% of buyers who make an offer on a home do so multiple times before succeeding in buying one.”
It may be a cliché but the old saying, “things happen for a reason” is often true. Sometimes buyers for one reason or another don’t ultimately get the house they thought they wanted. Have a “fallback” plan in case the original doesn’t work. The good news is that you are likely to end up feeling like you can’t imagine living anywhere but in your “fallback” house.
7. Make Your Offer
Your offer should be in the form of a purchase and sale agreement. Your agent will draft it, and you’ll sign or e-sign before it’s submitted.
It’s common for the negotiations to go back and forth a few times, typically with the advice and assistance of the respective agents. It’s important to remember that price isn’t the only item open for negotiation. Other possible items include repairs, inspection contingencies, fixtures, and closing timeline.
The purchase and sale agreement becomes legally binding if the seller accepts your offer. At that point, the purchase and sale contract will become a key component of the paperwork that guides the sale.
Every seller has their own needs, possibly including time to find another home to buy after their house sells. Gain an understanding of things from their perspective and you will have a much better idea of how your offer can meet their needs and yours.
Buying a new home can be as challenging as it is exciting. The idea is to stay cool and make the right moves in the offer process. This way you won’t end up having regrets about “the one that got away.”
Have additional questions about the purchase process? We’re happy to help! Call 888-673-5521 to speak with one of our mortgage consultants about a mortgage option that works for you.