Home buying process during a supply shortage of available houses for sale.
Many homes are receiving multiple offers on the first days they come onto the market.
To successfully get your offer accepted, you must
1. Have all your loan paperwork in order.
2. Understand market value versus appraised value . 3. Minimize the contingencies in your offer.
3. Do efficient searching with most up to date data. A home seller in the current market can receive up to a dozen offers in the first week of listing their home for sale.
Strategies when making your home purchase offer stronger to get accepted when there are multiple applications
There are several strategies you can take to make your offer stronger and have a better chance of getting accepted.
1.) Loan approval versus Loan pre-qualification. Know the difference and get the loan approval preferably with automated underwriting approval. You will need to submit all of your loan documents into the lender for this type of pre-approval. Loan approval amount. Understand that this amount will vary depending on the expenses associated with each house. Your loan approval amount could be less for houses with higher HOA fees, higher taxes or other housing expenses (SID, LID).
2.). Market Value versus Appraisal value. Know the difference and what the house is worth to you and what it will appraise. In supply shortage, houses are selling above appraised value but loans will only lend on percentage of appraised value; so you will have to pay the difference in cash, in addition to your down payment.
3.). Contingencies in an offer and how to make your offer stronger than the others without raising the price. The standard GLVAR has several contingencies where the buyer can withdraw their offer and get their earnest deposit back. It’s important to understand the timeline once your offer is accepted and you are in escrow. There will be several non-refundable out of pocket expenses for the buyer during this period.
4.). Search using the most up to date source of data: MLS and know how many offers and restrictions on a house before seeing it. Agents input data into the MLS. The MLS distributed that data to all the other websites. Some of these websites don’t update the status of a listing often. A listing could have an accepted offer and already be in escrow but still show as ‘available’. Another scenario is an offer could already be accepted but the agent has not changed the status in the MLS yet. Check status before seeing a listing.
Select a property: Narrow available properties by determining what you really want in a home.
The agent, they will help arrange home viewings for properties that suit your preferences.
Once you’ve selected the right home for you and your family, it’s time to make an offer and close the transaction.
Make an offer: Placing an offer can be a delicate process. The current market condition, time of year, work needed on the home and the length of time the home has been on the market can all affect your offer – not to mention your own budget.
The price is not the only factor within an offer, either; you can also negotiate closing costs, necessary repairs, etc.
Inspect the home: Once your offer is accepted, it’s customary to schedule a buyer’s home inspection. This is when you have the opportunity to get a professional opinion on the condition of the home and determine any red flags (like damage, pests, structural issues, etc.). Inspect the home:
Once your offer is accepted, it’s customary to schedule a buyer’s home inspection. This is when you have the opportunity to get a professional opinion on the condition of the home and determine any red flags (like damage, pests, structural issues, etc.).
Close the transaction: The process of closing on a new home can require several weeks (or longer) and many steps. During the escrow period, you will work with your lender to secure your mortgage. This process will involve gathering a wealth of financial paperwork as well as arranging a lender’s appraisal of the property.
During the closing, your lender may require you to purchase a policy of homeowners insurance, and you will have the option to purchase an owner’s policy of title insurance.
When the requirements of your purchase agreement have been fulfilled and your mortgage has been approved, you will be given a final walk-through of the property to determine that all repairs were made as negotiated. On the closing date, you will sign your mortgage documents and receive the keys to your new home.