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In this market - sellers can choose whichever buyer's bid they like best. The temptation to grab the highest price and call it a deal is naturally strong. But price is not the only factor that sellers should consider. A Conditional Approval from us will assist with your financing contingency.

From the buyer's perspective:
  1. Determine your budget and have a Pre-Approval done. In case if you to have to include and escalation clause - figure out ahead of time what your walkaway point is based on your budget above. 
  2. Make a high offer as much as you can afford immediately.
  3. Cut the inspection period to 2 days and remove the appraisal contingency (if you are a cash buyer).
  4. Consider escalation clause up to 15% or more and consider covering the difference if the appraisal does not meet the sale price.
  5. Make the earnest money deposit as attractive as possible. It shows that you are serious about going forth and closing the purchase.
  6. Large earnest money deposit to demonstrates your serious intent to buy. 
  7. Waiving title review based on preliminary title report.
  8. Do not request for seller's concession.
  9. Closing timeline flexibility can provide relief to the owner who may need time to work out details on their end.
  10. If you see it and like it, don't sleep on it - make an offer NOW!
  11. Offer clean terms on the contract with as few contingencies as possible. 
  12. Make certain that the Purchase and Sale Agreement is complete with all addenda, disclosures and iron clad Pre-Approval letter. 
  13. Be as professional as possible. 
  14. Call the agent to notify that an offer is on the way. 

For more courageous homebuyers - here are some additional tips but please consider and consult with your agent their risks as well as their benefits when considering any of these actions:

1. Waiver of inspection contingency.  Waiving it means that you might miss the opportunity to negotiate for repairs or the ability to back out of the deal.

2. Waiver of financing contingency. This contingency is to protect your earnest money should you fail to obtain home financing. Your earnest money is at stake by waiving financing contingency.

3. Waiver of appraisal. Appraisal allows you to decline or renegotiate the deal if the value comes back lower than the stated price. You may offer to waive or make up the difference between appraisal and purchase price.

4. Releasing earnest money usually between 1 to 3 percent. By releasing a portion or all of the earnest money, it demonstrates that you have vested interest in the sale moving forward. Should you backs out - the earnest money goes to the seller.

5. Waiver of the seller disclosure statement (Form 17) means that you waive your right to receive Form 17 and to rescind  the purchase within 3 days of receiving potentially items of material fact on Form 17.

From the seller's perspective. here are pros and cons of four types of home buyer financing:
  1. Cash is king.  Cash is so attractive that some sellers will accept a slightly lower sale price from a buyer who does not need a loan to close sooner with less contingencies.
  2. No appraisal to kill the deal. Cash sale does not require appraisal. Thus, the sale will go through quickly and eliminate the risk that the valuation could fall short of the agreed upon sale price. The lender will only lend based on what the appraiser says the home is worth. If the appraisal comes in low the seller has to take less or the buyer has to make up the difference.
  3. Offer must be reasonable. Sometimes the seller's idea of reasonable discount for cash isn't as large as the cash buyer thinks it should be. A lot of cash buyers will pay close to asking - 90% to 95%.
  4. Condominium restrictions. If the condo project has a high non-owner-occupancy or there are rental restrictions - then the entire condo project is not financeable - leaving it to cash only buyers. (I have a program for condo project with greater than 50% non-owner occupancy). 
  5. Pros and cons of a Conventional loan. A conventional mortgage is  a home loan that is not insured or guaranteed by a government agency (or at least not directly). It is less favorable than cash but better than FHA or VA loan.
  6. Repairs are rare on Conventional financing. Appraisers are less picky but sellers should still address problem found by a home inspector.
  7. Fast-closing times. Transactions with conventional financing can close relatively quickly although not as fast as cash. I can help you close in 30 days or less even post TRID.
  8. Conventional includes high balance and jumbo loan defined as above $424,101 or $636,151 in the highest-cost-areas.
  9. FHA loan is a mortgage insured by the Federal Housing Administration. The minimum down payment is 3.5%.  I can still help you close in 30 days with FHA financing. 
  10. VA loan is a mortgage insured by the U.S Department of Veterans Affairs. I can still help you close in 30 days with VA financing. 
  11. Appraisal for FHA and VA are a little more difficult because the regulations are a little different for those government-backed loans.




Posted by Sam Kader on June 11th, 2016 2:26 PM

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