First time home buyers, understand how to get your offer accepted.
I realize that the majority of the people we provide home loans to are first time home buyers, meaning they have never been through this process and we strive to really help them understand how they can be successful with us and achieve their desired result, which is to get the keys to their first home. With that comes the need to understand the relationship dynamics that play out in the process.
I believe the best place to start is to really understand what the sellers are looking for, what they really truly want. It would be naive of me to say they all want the same thing but as a generalization, they want the most amount of money for their home in the least amount of time with the least amount of hiccups.
All about those net proceeds to seller: At least for now, I haven’t seen a lot of sellers bite on low ball offers. Your phoenix real estate agent is going to really know where to be at and I would really take the time to understand their thought process around this. One thing to consider is that the sellers are looking at the number they are going to “net” or walk away with at the end of the transaction.
A $250k offer with $0 in seller concessions (where they pay the buyers closing costs) will net the seller more money than a $255k offer with 3% in seller concessions towards the buyers closing costs. To make your offer competitive, you can speak with your Phoenix Loan Officer and see what it could look like for them to pay your closing costs for you, this is a way to stand out from the other offers.
Least amount of time: In most situations (not all) the sellers are looking for a smooth and quick closing, so let’s break that down a bit. The average escrow period I would guess is 30-45 days, I say average because of course there are plenty of two week closings we do every month. Generally there is an inspection period of 10 days per the Arizona Residential Purchase contract, and a lot of agents like to make sure that the inspection goes well (rightfully so) to make sure there aren’t any major issues with the house. I strongly support getting a home inspection, know what you are buying. I can also say that in a time like this, requesting the seller to do a laundry list of repairs may not be the best bet (again consult with your realtor). Once you are in the clear on the inspection it is a pretty typical to order the appraisal and start the processing of the home loan.
This process is what generally holds up the transaction and puts you into that 30-45 day time frame. What has been successful in accommodating a quick close for our homebuyers is to have their loans fully underwritten and approved before the home shopping ever takes place. This means that the underwriter who has the FINAL say, has the FINAL say up front before you even get an approval letter to go shopping in the first place. The beauty of this, is that we can close your home loan in about 2 weeks on average which may make your offer stand out from all the other offers the seller is looking at.
Gone are the days of going out home shopping without a pre-approval letter in hand.
Some other things to be aware of in your home buying process is that the seller wants to know you are “bought in” and committed to buying the house they are selling. That can look a few different ways as well. Let’s look at the earnest money, how much did you put on the line? I think the average is about 1% of the sales price, but if you put less, does the seller take you as serious as they would another buyer who put 2%? Back to the inspection period, what about shortening that? Sometimes transactions get cancelled in the inspection period, would the seller want to know they have a buyer moving forward sooner rather than later? Again, I’m not going to play realtor here, but it is worth investigating further.
Another thing to consider when really making your offer stand out is this. Have a solid lending team, seriously, I am not just saying that because we have a great lending team, I am saying that because of the growing number of internet telemarketing type mortgage companies (I’m not naming names) the loan pull through rate has not been that great.
Sometimes loans fall apart at the 11th hour due to a loan officer (or telemarketer) not doing their diligence up front. Sellers get nervous sometimes, clearly they would like a cash offer any day, but that is not reality for most. What I can say is this, Google reviews of the loan officer you are choosing to help you, and see what other consumers are saying, there is some logic around this.
If you are in the market to buy a home and you need a mortgage, we are committed to helping you get to your goals, we will fight hard for you and our success rate based on the systems we have in place is impeccable. Let us be your partner in this transaction, we will be with you every step of the way.
Contact us, and let’s create a conversation around what it is that you are looking to do. Oh yes, and if you need a good real estate agent who knows how to fight hard and negotiate well for you, I can refer a few for you to interview. Happy home shopping!
-Justin