Your offer was rejected.
And Mojo was really counting on that big yard.
Watch this video and never disappoint Mojo again.
Is having your personal savings ripped from your bank account the last thing you want to experience?
Are other buyers stealing your dream home from you?
Do you know the #1 mistake that costs buyers more money than anything else?
In a sellers’ market, properties appreciate. This means that every time you lose out on a house during a bidding war, the winning bid becomes the pricing floor for future sales. The next sale could be tens of thousands of dollars higher… or more. This increase in price over a few weeks or few months could be devastating to your pocketbook. But you can stop the potential loss of your money in its tracks by winning sooner in the home buying process. Don’t make the same mistake that most buyers do: making an offer on a home completely unprepared.
Whether you’re frustrated that your offer has been turned down already (perhaps multiple times) or you’re about to embark on making an offer for the first time, these steps will save you from the frustration of losing your potential dream home… not to mention thousands of dollars from your personal savings.
Every buyer knows the intoxicating high of finding the perfect home with the perfect yard in the perfect location. Now it’s time to take the next step and sign a purchase offer! They even decided to offer the full price to give the seller everything they want.
And then they wait for the phone call congratulating them on their new home. But instead, they get a very different call….
Have you ever sat in a waiting room waiting for news from a doctor?
“Did the operation go OK? What did the MRI turn up? Is he going to be okay?” Imagine the devastation of the doctor returning with that look on her face that tells you the news isn’t good. “I’m sorry to tell you – and I know how important this is to you – but unfortunately it didn’t turn out like we hoped….”
You’re crushed. You have no control over the situation. You don’t know where to turn and what to do next.
Fortunately, when it comes to buying your own home, no one’s life is on the line… and there are ways for you to take back control.
1. Financial Preparation: Know Your Numbers
Pre-qualification isn’t enough; get pre-approved. Before you write any offer on a home, you should to be fully approved by your lender. There is a significant difference between a pre-approval and pre-qualification; pre-approval means that your loan is approved only subject to the appraisal on the home. Your credit is approved, your income is approved, you are what they call “fully underwritten by an underwriter.” It’s like having money in the bank. A pre-qualified buyer is simply a statement by a lender saying that based on what they have been told or shown, they’re pretty sure they are qualified… but it has not been approved by an underwriter. In some lending environments, lenders can take weeks to get the approval… and many sellers are not willing to wait for multiple weeks to find out if you’ll be approved. More likely, the seller will simply turn down your offer unless you are fully-approved and underwritten… especially in a multiple offer situation.
2. Secure Your Down Payment
Your down payment must be documented. It needs to be more than just your word that you’ll somehow come up with the money. You need proof of it in a bank statement, brokerage account, or – if it’s a gift from a family member – you must provide full documentation of a) where the money is, and b) proof that’s it’s a gift and not a loan. The money also must be seasoned, which means that it’s been in your account for at least 3 months… and if it hasn’t, then a trail of how it got there must be shown. Lenders don’t want to loan to you if you borrowed money to make the purchase.
3. Make Sure Your Offer is Perfect
Nothing is more frustrating than having your offer turned down because your agent was new… or in such a hurry that your offer is incomplete and loaded with errors. Sloppy offers are unsuccessful offers; take the time to review the offer yourself, and don’t be afraid to ask your agent questions about any and all clauses within the contract.
Wow, I haven’t read this much since junior high.
What if I just want to make a cash offer with Ed’s cash?
4. Shorten Your Contingencies
The first thing a seller sees in your offer is the price… but the second thing they see is your contingencies. Since they’re basically a buyer’s way to get out of a contract, they arouse suspicion in sellers’ minds. Will the buyer close? Will they try to get out of the deal? Can I make plans to move… or is this buyer going to be gone by next week? There are 3 common contingencies in most offers. First, the inspection contingency allows a buyer to fully inspect the home prior to committing to closing. Second, the loan contingency allows the buyer to process their financials with the lender of their choice until the lender states they are officially approved. And finally, the appraisal contingency is designed to have an independent third party verify that the accepted price is accurate and that the property appraises for the offered price or higher. The requested time frames of each contingency can make or break your offer in the seller’s eyes… and the shorter the time frames, the greater the chance for offer acceptance.
5. Nix The Loan Contingency
Loans not getting approved is the #2 cause – outside of inspection issues – of sales falling apart. If you have a lender who can guarantee your approval before you make your offer, you can remove the loan contingency entirely. This is massively impressive to sellers, who will often accept offers with no loan contingencies over higher offers with loan contingencies. Your offer can give sellers the peace of mind that the sale of their home will actually close… which is not just priceless to them; it can also save you money. However, I don’t recommend trying this if there is any possibility that you won’t get approved, since you risk losing your 3% deposit entirely.
6. Nix The Appraisal Contingency
All lenders require that the home you’re buying is appraised. If you’re making an offer above the asking price – or if the asking price appears to be high for the market – there’s a chance of what is referred to as a “low appraisal”. This means that the lender will only loan you a percentage of the appraisal price. Let’s say you’re approved for an 80% loan (which means your lender will loan you 80% of the appraisal price). If you offer $1,000,000 on a home, they’ll hypothetically loan you $800,000 (leaving you responsible for a $200,000 down payment). However, if the appraisal comes in at $900,000, the lender will only loan you 80% of the $900,000 appraisal price ($720,000), which means your down payment will need to be $280,000. This is a risk if you don’t have the extra savings… but if this isn’t a concern and you’re willing to remove the appraisal contingency, it increases the chances of the seller accepting your offer.
7. Tug Those Heartstrings
Many sellers can be highly influenced by knowing more about the buyer who is buying their home. Writing a nice letter (make sure to include a family photo) explaining what inspired you to love their home – and how committed you are to buying it – can go a long way. Note: due to equal housing laws, a seller cannot decide on an offer based on certain criteria, so before you submit an offer letter, be sure to consult with your agent or lawyer beforehand.
8. Ask The 25 Questions That Will Make Or Break Your Offer
You may be prepared to make an offer… but is your agent? Sellers – and their agents – will feel more comfortable accepting an offer from an agent who’s earned a reputation for closing deals… and only the most experienced agents know the 25 BULLSEYE QUESTIONS that a seller MUST be asked before submitting an offer. These questions are absolutely critical in order to craft an offer that a seller can’t refuse; grab them instantly – and free of charge – here.
Make a cash offer.
With our cash.
Only KRG can turn you into a cash buyer… and it’s easier than you ever imagined.
We’ve partnered with HomeLight, a national company that will step in and become a cash buyer for you. This will put you at the top of the heap when making an offer. It could save you tens of thousands of dollars and eliminate months of frustration due to no longer losing out on offers.
*Based on Chauner, Bailey. “How to Win a Real Estate Bidding War.” Redfin, 22 Nov. 2019 | Ed Kaminsky DRE #00958114 | Strand Hill | Christie’s International DRE #01968431. The information contained in this document, including, but not limited to, square footage and/or acreage, has been provided by various sources which may include the Seller, public records, the Multiple Listing Service or other sources. Broker has not and will not investigate or verify the accuracy of this information. When you use HomeLight Home Loans for your new purchase, the HomeLight Trade-In fee is 1.0% for the first 30 days HomeLight owns the property, and 0.5% for every 30 days thereafter. If you do not use HomeLight Home Loans on your new purchase, the HomeLight Trade-In fee is 3.0% for the first 30 days HomeLight owns the property, and 0.5% for every 30 days thereafter. The HomeLight Trade-In fee is calculated off of the final selling price of your current home. HOMELIGHT, INC. CA DRE #01900940 | EAVE, Inc. DBA HOMELIGHT HOME LOANS NMLS #1529229