Full-time successful real estate professionals know an insider secret about home mortgage lenders. Buyers who want to win in this market need to know that who they choose for financing could make or break them from getting the home they want.
In a market with multiple offers, there is nothing more frustrating or heartbreaking to a buyer than losing out on a home they consider ‘the one’ because the seller chooses another offer.
When financing contingencies are part of a buyer’s offer, that buyer is already at a disadvantage versus cash buyers. Making an offer that includes a contingency on obtaining a loan must be as strong as possible.
Sellers generally prefer conventional financing over FHA or VA financing, because conventional loans have fewer appraisal hurdles. FHA and VA appraisers can require repairs as a condition of the loan and there is no deadline on when the appraisal has to be completed.
If a buyer has solid credit and a strong pre-approval, plus the cash to cover an appraisal gap, there is always the option to make an offer that is not contingent on a loan or appraisal, even if financing is involved. The risk to the buyer is a loss of earnest money if something happens and they cannot get financing.
An offer without financing contingencies will compete much better against cash offers, and enticing terms to favor what matters most to the seller might tip the scales in favor of the buyer winning in multiple offers. We only recommend this for a borrower who has thoroughly vetted their financial confidence in obtaining a loan with a trusted lender.
For buyers who need a financing contingency, sellers in today’s market won’t even consider an offer with financing involved without a well written, detailed pre-approval letter that is based on actual credit reports pulled, plus income and assets verified. Ideally, a lender has also obtained an initial underwriting review of the loan.
A Reputable, Local Lender is the Key
The surprising insider tip? It makes a significant difference who the lender is on the pre-approval letter.
The pre-approval letter from a lender who is well known, and well respected locally, is often required just to get an offer considered. Unknown lenders, or internet lenders who simply provide a basic loan pre-qualification letter based on information provided by the borrower, are not worth the paper they are written on. Those offers are typically rejected without consideration by sellers because sellers have so many better choices.
With internet marketing, lenders can attract home buyers with a promise of amazing service and low rates. But delivering on that promise may never happen, because the buyer won’t ever win in multiple offer situations.
An April 30, 2021 article in a leading real estate publication, RealTrends, gives this tip on how to win in today’s market:
Submit a mortgage pre-approval from a reputable, local lender. A pre-approval from an out-of-town or big box lender can create doubt in the mind of a seller. Sellers who have a lot of options have been known to disregard offers from buyers who are pre-approved by an internet lender. Give the seller solid evidence the pre-approval is a sure thing by working with a local bank or credit union. Try to work with a local lender who can deliver a loan commitment in a week or less. Yes, that’s quick, but some lenders can get the job done.
At Path & Post, we have decades of experience working with seasoned mortgage professionals who are locally respected for their quality work and ‘on time’ closings.
We would love to help you Find Your Path Forward and win in this fast-paced real estate market! Give us a call at 770-720-4663 and let’s get started!