In its current post-crisis climate, the U.S. housing market has found itself in a situation that is alienating a lot of would-be home buyers. Employment throughout the country is on a huge upswing while mortgage rates are on the low end and continuing to drop. As a result of these conditions, many are testing the waters of the home market, looking for that perfect home to buy, but are finding a weak inventory of homes to choose from.
This has created a population of very eager buyers that are poised to make the right bid to attract a seller. So how do you, the home buyer, make the perfect bid? Here are a few guidelines to help edge out your competition and take advantage of current market conditions.
Cash Out
One way to really get a seller’s attention is to offer to make your payment in cash. Cash is king, if you can afford it. Paying in cash ensures the seller that you are already well-qualified to pay for the home and the transaction does not have to wait on loan approvals from third parties, which can take weeks. Providing a hassle-free experience for the seller may even be more valuable than offering a sum that is way over the asking price.
“What sellers really don’t wan to do is waste time,” said John Walsh, president of Total Mortgage, to CNN Money.
Take Your Mortgage Application As Far As it Can Go
If you don’t have a cache of money just waiting to be thrown down on a home, there is no need to worry as there are plenty of other ways to offer the seller an easy transaction. One way is to get your mortgage approval in line by pre-underwriting it. This is a pre-approval process that involves getting all of your income and asset documentation reviewed by your lender.
Once the process is complete, the only step that needs to be completed after the contract is signed is an appraisal on the home. This is a measure that not only provides assurance to the seller, but also to the buyer. Some lenders will offer a guarantee that if they are unable to complete the transaction due to a mistake or change in lending laws, they will refund the buyer’s deposit.
Don’t Overdo Contingencies
Contingencies are important in providing protection for buyers, but some sellers may not take you as seriously as a buyer if you have a large number of factors that can cause you to back out of the sale. If you are really serious about buying the home in question, keep your contingencies to a bare minimum.
One contingency that is important to hold onto is the home inspection. If you waive your right to back out of a sale but then find an expensive problem in the inspection, you can find yourself in a world of trouble. Even if your dream home is on the line, know what you are getting into before committing to something that can’t be backed out of.
