In Part 1 of this two part series, we discussed that pent up demand from a cold winter could result in a strong spring real estate market. We described five tips that every Seller should follow to make a quick, top-dollar springtime sale. Historically, the spring and summer markets generally favor Sellers. With Buyers abound, it’s important to make your offer stand above the crowd. By following these 5 tips, a Buyer will help to make her offer more attractive and thus, more likely to be accepted.
- Establish an Early Relationship with Real Estate Professionals: Our regular readers will undoubtedly notice that establishing a relationship with a top quality real estate professional is essential to most facets of a real estate transaction (to see examples, click these links to read: Five Top Tips for Selecting the Right Mortgage Professional and Ten Reasons to Use a Buyers Agent when Buying a Home). Notice that we purposely used the term “professionals.” A serious Buyer will not only establish a relationship with her agent, she will also establish a relationship with a mortgage professional (if you clicked “Five Top Tips for Selecting the Right Mortgage Professional,” then you would know that this term can mean: mortgage broker, mortgage originator, loan officer, loan originator, bank officer, or any other loan professional), and an experienced real estate attorney. Establishing these relationships early in the process a) helps to put your transaction at the forefront of that professional’s attention and b) positions the Buyer to make decisions more quickly.
- Cash, Cash, Cash!: Like an adult, high-stakes game of rock-paper-scissors, cash will always beat financing. The Buyer who makes their purchase contingent on obtaining financing is simply a riskier Buyer than one that will come to closing with cold, hard cash. Lack of financing is one of the most common real estate transaction deal-killers–Sellers are aware (and wary) of this. The preference for a “cash deal” is so strong that many Sellers will accept a lower cash offer over a higher, contingent offer. Notwithstanding, most of us don’t have liquid funds to purchase a house with cash. Buyers who are strong candidates for financing (or who are simply willing to gamble their deposit) can place an offer without the contingency even with the intention of financing the transaction–this is not something that we would recommend. A good middle ground could be submitting an offer with a lower financing amount. The Buyer who will finance 70% of the purchase price is much more desirable to a Seller than the one who will finance 97% of the purchase price.
- Be Prepared to Move/Make Decisions Quickly: Being prepared to make quick decisions can be the difference between buying and continuing your search. If your agent calls with a new listing, make the effort to view it as quickly as possible. If you’ve found a home that you would like to buy, send the offer to the listing agent as quickly as possible.
- Realize Your Offer Contains More than a Purchase Price:Undoubtedly, when a Seller picks up a new offer, she will look at the purchase price first, but the Seller will not end her review there. The Buyer who realizes that an offer contains many terms, each of varying importance, is the Buyer who will make an offer that stands above the rest. Consider the concessions you’re requesting, the number and degree of any repairs (you may want to fix a light switch yourself), the number and quality of contingencies (consider a lower financing contingency), and your closing date. Sellers often want to sell as quickly as possible. The offer that has a closing date 6 months after signing the Purchase and Sale Agreement is simply unattractive to most Sellers–this is especially true with developers. A developer wants their return on investment as quickly as possible so that she can reinvest as quickly as possible.
- Know the Difference Between Pre-Qualification and Pre-Approval: Some Buyers think that pre-qualification and pre-approval are synonymous. In fact, they are very different and this difference can be the deciding factor for Sellers comparing multiple offers. Pre-qualification is a lender’s estimate of the the Buyer’s borrowing power based on stated information from the Buyer. A pre-approval involves a much more detailed analysis of the Buyer’s finances. This analysis can include the review of tax returns, income statements, credit reports, etc. An offer submitted with a pre-approval letter allows the Seller to draw the inference that you are more likely to secure the financing upon which you’ve made your purchase contingent. There is a trend among some Lenders to do a more robust review of a Borrower’s financial status before the Borrower/Buyer submits their Offer. Lenders will verify income and debt information in the same or similar manner as done during the standard underwriting process. Dubbed “pre-underwriting,” this level of review could make some non-cash Buyers comfortable making an offer without a financing contingency or Sellers more comfortable with a non-cash Buyer’s financial strength.
Historically, the spring real estate market favors Sellers, but it remains a popular time to buy primarily because of increased inventory, improving weather, and a desire by many Buyers to move before the next school year starts. By following these 5 tips, Buyers will position themselves and their offers ahead of the competition, increasing the likelihood that their offers will be accepted.
Stiles Law, with offices located in Boston and Marshfield, Massachusetts, is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions. Stiles Law serves all areas of eastern Massachusetts–the North Shore, Boston, and Cape Cod, in addition to the entire South Shore, including: Plymouth, Kingston, Duxbury, Hanover, Pembroke, Marshfield, Scituate, Norwell, Cohasset, Hull, Hingham, Weymouth, Braintree, and Quincy.
Copyright © 2014 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts.