Many Sellers who are facing foreclosure are notified by their lender that they should try a loan modification, but the reality is that loan mods don’t work in most cases. Many lenders will deny them or agree to a loan mod that you can’t afford. The worst loan mods are the temporary arrangements, where the bank agrees to accept a reduced payment for 6 -12 months, and then pulls the rug from under you by canceling it after you’ve made all of the payments on time. Some sellers are able to successfully get a loan modification, but many are not. The reason being, if the banks made it easy, then everyone would do it. If you tried to get a loan mod and it didn’t work out, a short sale is your next best option. You can receive relocation assistance, get a fresh start and be ready to buy again in as little as two years.
In March of 2015 the average sale price was $669,824 and increased to $746,332 in March of 2016. This was 11% increase. The average amount of days that sellers waited to accept an offer in March 2015 was 43 days and decreased to 35 days in March of 2016. This means that sellers were able to sell their condos 19% faster. The amount of condos that sold in March of 2015 was 248. For the same period in 2016, 291 condo sold. This was a 17% increase in sales volume. This supports that sellers stand to sell for more money in less time in 2016.
When it comes to making offers in a strong sellers market like we’re seeing in the Spring of 2016, it can be very discouraging for buyers. The key is to first and foremost stay positive and to secondly focus on what you can control. With this in mind I’ve put together a list of 3 things every buyer can do to ensure their offer has a higher probability of success. Obviously the offer price is the first thing a seller will look at, but in addition to the offer amount, theses three strategies may have a significant impact on your offer being accepted.
Close in under 30 days – For many sellers, this can have a huge impact on whether or not they entertain your offer depending on the circumstances. For example, if a seller is relocating and needs to sell quickly, this will definitely make your offer more attractive. Some lenders may not be able to get it done in less than 30 days so be sure to confirm how fast your lender can get it done before submitting an offer.
Work With A Reputable Lender – When a seller reviews your offer they want to ensure they are engaging with a strong and credit worthy buyer. If you are a cash buyer, then you will definitely have a leg up on the competition as long as the offer amount is competitive. But if you are going to be using financing, make sure you go with a lender that has a strong reputation for getting deals closed on schedule. One of the fastest ways to lose out a home is by working with a “bad” or unknown lender. For example Bank of America has one of the worst reputations for delaying closings or denying borrowers after weeks or months waiting for a response. When the market was booming back in 2006, I had a client that had an approval with ‘Dream Loans Yes.com’. That was actually the lender’s name on the pre-approval. Needless to say, the buyer struggled to get an offer accepted. Most established agents advise their sellers against entertaining offers from unknown and fly by night lenders.
Put Down A Higher Deposit – Another aspect of your offer that can make it appear stronger is if you are able to put down a larger deposit. A buyer putting down 20% looks a lot stronger than a buyer putting down 3%. While it may not be feasible for you to put down 20%, a 10% down payment can help increase the strength of your offer as well.
In addition to these three strategies, you may also consider waiving your inspection and financing contingencies, but this should only be consider by experienced home buyers. While this can really boost your odds of getting an offer accepted, it could cost you your down payment or put you in a situation where the home you purchase requires more work than you are able afford.
Many first time home buyers may not know this, but a Bank of America Pre-approval letter is one of the worst approval letters you can use if you are looking to purchase a home. Many listing agents and sellers refuse to entertain offers from buyers with Bank Of America Pre-approval Letters. The reason for this is the time it takes for them to underwrite loans and provide updates. They may take 4 weeks to review a file and request extensions and then deny a loan. The combination of poor communication and their inability to close on time or close at all have led experienced agents to essentially boycott their services. If you want to submit a competitive offer, choose any lender but BofA and you’ll increase your probability of success!