This article was originally published on Better.com
I talk to people every day who are wondering just how they’ll get their dream home in competitive markets like San Francisco, Denver, and Seattle. In these areas, sellers don’t just have multiple offers. They have offers from cash buyers – people who have enough funds to pay for the home outright. Cash offers are seen as less risky to sellers because they know the money is in the bank. Other offers are contingent on the buyer securing a loan from a lender, which could theoretically fall through. The key is finding a lender that removes that risk.
When you’re competing with cash buyers, making your offer stand out may seem impossible. But at Better Mortgage, we’re helping our customers do just that by adding as much certainty as possible before they even put an offer on their dream home.
Here’s how you can prepare to make the best offer possible (including one that might be even as competitive as cash).
1. Do your research.
Determine what’s important to you (and your partner, if you’re buying a home with someone else) before you start looking. In a competitive market, there may not be time to investigate school districts or debate how many bedrooms you need once you’ve found a home you’re interested in. Having your criteria established early on, including what you’re willing to be flexible on, can help give you clarity and reduce stress when you go shopping and start making offers.
2. Find a great real estate agent.
A good real estate agent should have a solid understanding of the market (including how much homes like the ones you’re interested in are generally selling for), be proactive, and communicate well. Don’t just go with the first recommendation you get – vet a few agents to make sure you’re comfortable with who you’re going with.
3. Create certainty for the seller’s agent – and you.
Of course, before you go shopping, you need to know how much you can get financing for. In a hot market, sellers won’t take your word for it – they’ll need proof from a lender. At Better Mortgage, we offer our customers a Verified Pre-Approval Letter. It involves both you and us putting in a bit of extra effort upfront to verify your financial details and documents so that we can tell you exactly how much you’re approved to borrow. You can also easily change the approval amount on the letter if you don’t want to share your full amount with sellers.
Essentially, our Verified Pre-Approval Letter can give you the certainty and confidence of a cash buyer because it means that we’ve already underwritten your finances. Some of our customers even waive the financing contingency in their offer once they have their Verified Pre-Approval from us. Talk to your Better Mortgage Loan Consultant and your agent to understand if this may be a good course of action for your situation.
4. Bring your lender to the table.
Even with a pre-approval letter in hand, sometimes a seller needs to hear it from the horse’s mouth. If you can tell Better about a property before you make an offer, your dedicated Loan Consultant is more than happy to call the seller’s agent on your behalf to confirm that you’ve been fully underwritten and to eliminate fears that you will run into financing issues as a result of your income, assets, and debt. And because we fund and originate all of our loans in-house, our loan consultants, underwriters, and closing agents are always available to answer any questions and make sure the closing process goes smoothly.
5. Get back up.
In certain situations, your property might also qualify for a Better Mortgage Commitment Letter, which gives you the opportunity, if you choose, to waive both the financing and the appraisal contingency. The Better Mortgage Commitment Letter ensures that Better Mortgage will cover up to $50,000 (or 7% of the purchase price) of your escrow deposit should something prevent us from funding your loan through no fault of your own.1 Eligibility is based on the property type and details of the loan – we can let you know if you qualify once you let us know the address of the property you’re interested in.
6. Offer a quick closing.
The best part about having a Verified Pre-Approval letter is that once your offer is accepted and you’re ready to apply for a loan, our underwriters have already done most of the work verifying your financial details. That means we can usually close your loan weeks faster than the industry average, many times within 21 days from locking your rate.2 (The industry average is as much as 50 days.3)
7. Make it personal.
Selling a home can be just as big of a decision as buying one, and many sellers want to know that they’re leaving their home in good hands. It never hurts to write a sincere letter to the owners, letting them know why you love their home and assuring them that you’ll treat it well. If a seller is choosing between a few offers, your personal touch could be the deciding factor.
- We are committed to closing all single-family/detached unit loans that have Verified Pre-Approval in 21 days or less. Our commitment for condos, attached units, and loans without Verified Pre-Approval is 25 days, and our commitment to jumbo loans is 30 days. ↩
- Terms and conditions apply. See https://better.com/content/better-offer-terms/ ↩
- As of January 2017. https://www.housingwire.com/articles/36305-the-trid-ripples-time-to-close-mortgage-loans-continues-to-rise ↩