Making A Competitive Purchase Offer

The window of opportunity for purchasing a new home in the Dallas/Ft. Worth area is continuing to show signs of improvement. If you are already in the market and have found the new home you are ready to buy, you will want to make your purchase offer attractive to the seller, especially if you find yourself in a multiple offer situation.

That is where the value of working with an experience mortgage professional is the strategy and the negotiation behind you moving towards your new home. Not working with an experienced mortgage professional could result in you failing to land yourself your new home due to insufficient or improper funding.

Following are a few considerations on why working with a mortgage professional will allow you the most room when making your offer:

1. The Right Financing Plan Makes All the Difference

You must include the type of financing you are securing to the seller in your offer. If the loan to finance your purchase is a VA or FHA loan, you will need to recognize the additional financial and performance obligations this places on the seller because of “non-allowable fees.” These are typical loan fees that are charged by lenders and title companies. They are called “non-allowable” because you as the buyer are “not allowed” to pay them. The result is that the seller must pay them instead of you. Since these are fees they would not have to pay with conventional financing, the type of financing must be included in the offer. It’s also beneficial to obtain the amount and itemized list of the lender’s non-allowable fees so that this can be considered when making your offer.

2. Real Estate Appraisals and Your Closing

FHA and VA loans require more stringent guidelines with regards to the appraisal and home inspections. In addition to determining the estimated market value of the property, the appraiser is required to perform certain minimum inspections. These are not as detailed as a professional home inspection, nor are they a substitute.

Be sure to have a good idea of what the seller is looking for in regards to the closing date so that this does not become an obstacle to the closing. If the seller has an FHA or VA loan they definitely will want to close and fund by the end of a month to avoid being charged a full month of interest by their lender. This should be considered in the offer presented to the seller.

3. Seller Contributions

If you are using conventional financing, the amount of your down payment will determine the amount of contributions you can have the seller contribute to your closing costs and prepaids (hazard insurance and interest for the month). This typically ranges from three (3%) percent to six (6%) percent of the sales price. Your loan officer should be able to provide this to you. If you do ask for the seller to contribute this amount, you will want to be sure you consider this in the seller’s bottom line.

4. Approved Wins over Pre-Approved

If two identical offers are presented to a seller and one offer shows the buyer approved and the other shows pre-approved, the approved buyer wins. It is a great advantage to provide your real estate agent with an approval letter from your lender. The approval letter should only be conditioned based on an acceptable appraisal, verification of funds to close, verification of employment, and clear and acceptable title of the property.

If you are in the market to purchase a new home, today’s market environment is very promising and offers many opportunities. I would be glad to help you.

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