Avoid getting the "You didn't get the house" call by writing and submittinga strong contract. What is a strong contract?
A strong contract is the BEST contract you can write... especially if you are in a Seller's market. It is key that you are working with a REALTOR® that understands current market conditions, and works well with other REALTORS® . Taking time to discuss a potential offer with the listing agent goes a long way, prior to writing. Some of the best transactions I have had as a listing REALTOR® are with agents that call in advance to tell me about their Buyers and discuss what my client's needs and goals are prior to writing their clients contract. These transactions typically result in win/win closings.
Let's face it, everyone has their "hot buttons". As a recent example my Seller's property had sold within 10 days... Then fell through (Buyer's medical emergency). The property was located in an area where there was a Mello-Roos (for community services) in addition to the standard property taxes. Nearly every interested buyer was downsizing and looking for that single story home and nearly all were put off by the additional cost. The next Buyer was willing to pay full price for the property if the Seller would agree to pay off the Mello Roos obligation. Having researched and discussed this with my Seller in advance, as an option brought the sale through. Better yet, we agreed to accept the offer at $8,000 lower and have the Buyer use those funds to pay off the Bond themselves.
Other items to consider in bringing in a strong contract are:
- Pre-approval from your lender. Very few sellers are willing to take their house off the market without a solid pre-approval in hand. This is also where a knowledgeable Realtor is a valuable asset.
- There are differing pre-approval letters. Some not worth the paper they are written upon. It is important to talk with the Loan Officer to determine how far in the process this pre approval is.
- Some pre-approvals are based on credit report and on line loan application. - Huge cause for concern!
- A thorough Pre-Approval should also include a review of the income documents including tax returns at the very least by a knowledgeable loan consultant and a copy of the AU (Automated Underwriting) Findings. Reading of those findings will tell you what types of documentation will be required for underwriting as well as the potential for the sale or closing of another property which may not have been disclosed in the contract as a condition of the sale.
- Use the Best price & terms. Certainly there are lots of considerations to weigh when writing your contract. All of which should have been discussed with your Lender and Realtor. Items such as;
- Maximum loan amount, maximum down payment.
- Monthly payments. What you can qualify for and what payments you are comfortable in making - which may not be the same.
- Reasonably negotiated closing costs and repair requests.
- If it is possible that a bidding war will ensue, start with a bid exceeding the listed sales price.
- In some cases, the appraiser may cut the value back to original list price, which the Seller may or may not accept.
- When I'm representing the Seller and the price goes to the stratosphere due to multiple bids.. We pre-negotiate that the buyer pay any difference between the contract and potential lower appraisal. If you are the Buyer... you may need to consider that as an option-even if not pre-negotiated.
- If you need help with buyer closing costs, ask for a dollar credit, and increase the sales price to offset this on the seller's side. This makes it more agreeable for the Seller and in this manner you are "financing" a portion of the costs over the life of the loan by getting a slightly higher loan amount.
- An agent cover letter, explaining your Buying motivation and timing. This is especially important when needing help from the seller for closing costs, or if the closing date extends beyond the locally normal time frame. Love getting your questions... Don't hesitate to give me a call or drop me a line - Ingrid