5 Tips That Will Ensure a Buyers Purchase Offer is Accepted
It sure seems likes the lenders are changing their rules now almost every week and making the loan process even more difficult for buyers. Because of all these new changes, many sellers are being very skeptical that a buyer will be able to get their financing approved and close escrow on their transaction, thus they are being very picky about whose offer they will accept into contract. Here are 5 great tips to help a buyer stand out from the crowd and ensure their purchase offer will get accepted.
1. Make sure the pre-approval letter advises what type of financing buyer is getting
It is a good idea to provide a pre approval letter that acknowledges what type of financing the buyer is getting and how much of a down payment they are using. If the buyer is using conventional financing and is putting down 20% or 30% as a down payment, make sure to write this into the pre-approval letter, as this will always place ahead of a VA purchase offer that has no down payment requirements, or a FHA buyer that has a 3.5% down payment. If the buyer is submitting a FHA or a VA offer, make sure to follow steps 2 through 5 to strengthen the offer.
2. Always Provide a DU Underwriting approval with the offer
It is important that all buyers have an offer that is accompanied by a “DU” underwriting approval. A DU approval is when the buyers application has been ran through Fannie Mae’s, FHA’s or VA’s automated DU (Desktop Underwriter) and will be issued with either an approval or a denial.
An offer letter accompanied by a DU underwriting approval will always place ahead of an offer just accompanied by a basic pre-approval letter, as a DU underwriting approval shows the most important information needed on a buyers profile to give the seller a good idea of the strength of the buyer. For example it lists the credit scores, debt ratios, down payment and the type of loan they are approved for.
Also it is important to note that the DU underwriting approval must match up with the loan program the offer is submitted for (see # 1 above), it is not uncommon for example, to have a buyer who has a FHA DU approval but is submitting an offer for conventional financing.
3. Provide proof of down payment funds
Always provide proof of where the down payment funds are coming from for the buyer. Make sure to send over recent bank statements or statements from any account they are using for the down payment. Make sure there are enough funds in the statements you are providing to match the % of down payment the offer is for. As many times statements are provided but there are not enough funds to cover a 20% down payment and 2 months reserves for example. Or if the buyers are going FHA and are getting a gift from the parents, provide a copy of the gift letter from the parents.
4. Provide a copy of the buyers credit report (first page only)
Very few offers come across with proof of the buyers credit scores, so this is a good way to stand out. If the buyers credit scores are very good, list them on the pre approval letter and point this out on the offer. Also provide a copy of the first page of the buyers credit report that lists the 3 credit bureaus and the 3 fico scores, make sure to black out social security numbers for privacy issues. This is a great way to provide full transparency on your buyers offer, so the seller can see the credit strength of the buyers profile.
5. Make sure everything on the buyers offer is current
Because lenders have been making a lot of changes to their underwriting guidelines recently, the buyer may not qualify for the particular loan program that they got approved for a few months ago. So a good tip for a buyer that has been putting in offers for a few months now on various properties, is to make sure all the dates on the buyers approval letter, DU approval and all funds provided are current and within the last 30 days at least.
It is not uncommon these days for a buyer to be submitting offers for up to 3-4 months, so sometimes the pre approval letter or the DU underwriting approval has a date that is a few months old. Because the buyers credit scores might have dropped and they may not qualify for a particular loan program anymore, it is best to make sure that all the dates on any approvals are all very current.
In Summary
There is no doubt that the overly stringent lenders are making everyone and especially sellers a little more skeptical these days about who will be able to close escrow, so using these tips above will only strengthen a buyers offer and give them every opportunity of getting into the home they want, which will ultimately help everyone involved in the transaction meet their goals. Transparency is the key to a successful purchase offer these days, so the more work that is done upfront to ensure a buyers financial profile is solid, the better the chances of getting the seller to say yes to your offer.
If you have any questions about any of these scenarios above, please do not hesitate to contact me directly at 858-200-9602.
Tags: 5 Tips That Will Ensure a Buyers Purchase Offer is Accepted
This entry was posted on Wednesday, June 1st, 2011 at 1:04 am and is filed under 5 Tips That Will Ensure a Buyers Purchase Offer is Accepted. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.