Right now our local real estate market is hot and most good homes sell in a multiple offer situation. Preparing an exciting offer is crucial to getting the seller to accept your offer. If you give the seller any reason to question your offer or drag their feet on accepting your offer and we will likely end up in a multiple offer situation which will end up costing you thousands of dollars more to buy the same home.
Attached is a copy of The Real Estate Purchase Contract (the REPC) that we will use when we submit an offer on a home. Page 1 and page 6 are the most important with lots of details in between. Here are the important contract terms that separate one offer from another:
- Sales Price: Higher the better for the seller. In a multiple offer situation an escalation clause may make sense.
- Earnest Money: 1% is the norm but the more you put down demonstrates confidence in your ability to get a loan
- Down Payment: 3.5 % FHA or 5% Conventional minimum are fine but obviously if you and another buyer offer the same amount for the home and the other buyer has 20% or 50% down payment then the seller will likely accept their offer over yours because they will think they are better qualified and more likely to close since there is less risk to the lender.
- Seller paid Closing Costs: It is best if you cover your own closing costs. If you need help with Closing Costs, then I suggest we discuss with your lender about having him cover those for you via a small interest rate increase usually .25%
- “AS-IS”: In section 10 of the REPC it states that the buyer is buying the home in its “as-is” condition and you have the right to do inspections. It is risky to remove the Buyer Due Diligence condition from a contract but if you are confident enough in the condition of the home, removing this clause would definitely strengthen your offer. Another option here would be to have a very short / quick Buyer Due Diligence Deadline.
- Buyer Due Diligence Deadline: Most agents will propose a 14-day Buyer Due Diligence Deadline See section 8 of the REPC however one week should give you sufficient time to inspect and evaluate the home. If we need more time for specific reasons the seller would likely extend this deadline if needed. I suggest 7 days after acceptance (after this date you cannot back out of the contract for any reason other than Financing or Appraisal)
- Buyer’s Financing and Appraisal Deadline: Many agents will write 14 – 21 days to get the appraisal back and double check your loan with an underwriter. This is super week and I do not suggest working with a loan officer who is not experienced enough to know if your loan will be approved or not. I suggest a financing and appraisal deadline of 10 – 14 days after acceptance (This is the date when your Earnest Money becomes non-refundable). Me, you and your loan officer become a team and work together to successfully close on your home. I need to speak with your loan officer ASAP to coordinate the offer and deadlines with him.
- Settlement Deadline: Most seller want to close ASAP so they know the deal is done and they have their money in their bank account. It sure makes packing up a house a lot easier without the stress and wonder if the buyer’s financing is going to be approved or not. To make a strong offer I suggest I find out from the listing agent what the sellers needs are exactly and custom tailor the Settlement Deadline accordingly. If no direction is given, I recommend closing 21- 28 days after acceptance and allowing the seller to rent back from you if that’s helpful to them.
- Possession: If the seller is not renting back from you after closing, it’s nice to give the seller 2-3 days to vacate the home after closing. Some sellers may really appreciate the chance to rent back for a few weeks while their new home comes available. If you are getting an Owner Occupied Loan, your lender will require you to take possession of the home within 60 days after closing. If we do a rent back situation I suggest we set the rent rate in between your monthly payment and the sellers monthly payment thus demonstrating a fair compromise.
- A plate of cookies and a personal note about your family goes a long way. Some sellers are more sentimental than others but all sellers should appreciate a kind gesture.
In summary, there is a lot of pyscology, money and emotions that go into an offer. We need to have a well-organized solid offer and present the offer in a tactful and sincere way.
Convincing a bank to lend money is not easy. Mortgage investors are very conservative and there are unique challenges with every loan. We need an amazing loan officer on your side to prepare the loan application, orchestrate the borrowing process and get the loan closed!
Because I’ve been selling homes since 2000 I know a lot of loan officers. Jon Chamberlain with Security Home Mortgage is the best one I’ve ever worked with! He is smart experienced and honest. Jon will give you the best interest rate and terms possible and he consistently closes loans faster than anyone one out there!
Security Home Mortgage is an actual LENDER! Not a broker. They have in house processing, in house underwriting, in house document prep and in house funding! Jon co-owns Security Home Mortgage so if we need a rush, a favor or if your loan is on the border line of qualifying, if your loan makes sense, Jon can still do the loan where most loan officers can’t.
Jon will ask for all sorts of documentation and there will likely be challenges during the process but he and his team are the best out there. Please call Jon to schedule a time to analyze your situation, figure out which loan program is best for you, get you pre-qualified for a loan and to help determine what price range you want to look in.