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The Mortgage Market Insider

"The Mortgage Market Insider" is a newsletter that I send out to homeowners, real estate agents and other industry professionals every two weeks. It is currently read by over 7,000 subscribers. I always cover a current topic that is relevant to the mortgage and real estate markets.

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A Bi-Weekly Mortgage and Real Estate Ezine To Keep You Current

January 10th, 2022

7 Tips to Help Your Purchase Offer Stand Out From the Crowd

Hi John,

In today’s competitive housing market where multiple offers are the norm, it is very important that a buyer’s offer stands out from the crowd. Buyers and Realtors have to get creative with their offers and also provide full transparency upfront, so the seller will feel comfortable that a buyer will be able to obtain financing and close escrow. Here are 7 tips that will help your purchase offer stand out from the crowd.

First of all, I wanted to share that I will be on TV tomorrow morning on "The American Dream" show. We will be talking about interest rates and tips for buyers to help them get qualified for financing. I also gave my prediction for interest rates and where they will be later this year :).

The show starts at 10 am and is available on Time Warner and Cox. I hope you can check it out.

7 Tips to Help your Offer stand out from the crowd.

Here are 7 tips that will help your purchase offer stand out from the crowd.

1. Include a personal cover letter with your purchase offer

A good idea in this competitive housing market is toinclude a personal cover letter with the offer that introduces your family and explains why you are the right candidate to purchase the home. Include a family picture too.

If you can tug at the heart strings of the seller, they may be more inclined to choose your offer over others. Many agents and buyers tell me this strategy works!

2. Your loan approval letter verifies your type of financing

Include a loan approval letter with your offer that clearly explains what type of financing you are getting and how much of a down payment you are using, make sure it is also signed by the lender and lists their contact info too, so the seller can call and verify all the information.

If you are qualified for conventional financing and putting down 20%, make sure to write this into the loan approval letter, as this will usually place ahead of an offer with a lower down payment. If you are submitting a FHA or VA offer and are using a limited or no down payment, follow the rest of these steps below to strengthen your offer.

Include a DU underwriting approval with your offer. A DU (desktop) underwriting approval is when a buyer’s loan application and credit report has been ran through the conventional, FHA’s or VA’s automated underwriting systems and was approved.

A DU underwriting approval displays the most important information on a buyer’s profile, which gives the seller a better idea of the strength of the buyer. For example, a DU approval displays a buyer’s credit scores, debt to income ratios, assets, reserves, down payment and the type of loan program they are approved for.

4. Provide proof of down payment funds

Always include proof of down payment funds along with your offer. Make sure the name on the bank statements, or any other account being used for the down payment, matches the buyers name on the contract and approval, and also verify there are enough funds in the statements to cover the down payment listed on the offer.

If you are getting a gift from a family member, provide a gift letter and proof of funds from the donor.

5. Increase your deposit

Want to show a seller how serious your offer is?Consider putting down a bigger deposit in earnest money. This may seem risky for some, but earnest money is there for a reason. If you are uncertain about putting a “noticeable” amount of earnest money on the table, it may be a sign to the seller that you are uncertain about the house itself.

Assuming you hold up your end of the bargain and you have the right contingencies in place, it won’t cost you any more in the long run since the deposit goes towards your down payment if financing is involved.

6. Be flexible and don’t ask the seller for credits to cover closing costs

It's a good idea to ask the seller’s agent upfront what you can do to make the offer more enticing to the sellers.

For example, can you be flexible on the closing date for the seller? Also, a purchase offer asking for seller credits to pay for your closing costs will usually place behind an offer that does NOT ask for any seller credits. Some people assume just because a buyer does not have funds for closing costs, to just ask the seller to cover them.

SOLUTION: To make a buyers offer more competitive, the lender can pay for ALL the buyers closing costs with a lender credit.

How does this work? It’s easy, instead of taking say a 3.875% 30 year fixed rate, just take a slightly higher rate of 4.25% instead, and now there is a lender credit of roughly 2.5% available that can be used to pay ALL a buyers closing costs.

Not only is this a good negotiating tactic so the buyer and seller can strike a deal, but of course it saves a buyer money too. We present this option to all our buyers.

Another Tip, is to offer to pay for the sellers Owners title policy and transfer tax, these fees amount to roughly $2,500 on a $400k home, so this is another way to sweeten the deal for the seller to accept your offer. If the buyer does not have the funds, we can also pay for these fees with a lender credit.

7. Close the Transaction Faster

Being able to close a transaction faster is another way to entice the seller to accept your offer in this competitive market. For example, if a seller is reviewing 3 offers, and there is a 21 day offer, a 30 day and 45 day offer, many times the seller will take the faster closing.

My company Citywide Financial Corp can close a Conventional, FHA or VA Purchase Transaction in 21 days, and even 17 days if a major rush is needed. We have an outstanding team set up and dedicated to help close transactions fast.

I hope you found these tips useful. I review offers every week with Realtor partners, which is a great opportunity to look at the different types of offers that buyers are submitting in this current market. The majority of offers I review usually only have 2-3 of these items above provided.

Full transparency upfront is the key to getting an offer accepted these days, because usually the Path of Least Resistance is what we look for when reviewing offers! As many times the offer that is presented the clearest, is flexible and addresses any issues upfront, is the offer that will be picked!

If you have any questions about any of these tips above or getting approved for financing, please do not hesitate to contact me directly at 858-442-2686. I look forward to chatting soon.

P.S. If you would like to be updated faster on important industry news or any new loan programs that come out, please join my Facebook page .

In This Issue

  • 7 tips to make a buyers offer stand out
  • Writing a strong cover letter
  • Why providing a DU underwriting approval is so important
  • Being flexible with your purchase offer

Previous Newsletters

Quick Mortgage Links

Tips for Buyers

Did you know conventional financing now allows all of the down payment to be gifted?

As conventional financing now only requires a 3% minimum down payment, buyers can ask family for a 3% gift to cover their down payment and closing costs.

Tips for FHA Buyers

FHA buyers have to be extra careful these days when looking at homes and writing up contracts, as the FHA Discontinued their 90 Day Flip Waiver!

This waiver allowed FHA buyers to purchase properties that are being resold within 90 days of being fixed and flipped. This means FHA buyers will have to wait >90 days to purchase a home that was fixed and flipped by a seller. HERE are some additional FHA tips to share with buyers

Were you aware of this new rule?

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Joke of the Week

An Irish priest and a Rabbi get into a car accident. They get out of their cars and walk to the side of the road.

The Rabbi says, “Oy vey! What a wreck!”

The Irish priest pulls out a bottle of whiskey and says, “Here, drink some of this. It will calm your nerves.”

The Rabbi drinks the whiskey and asks, “What are we going to tell the police?”

The Irish priest replies, “I don’t know what you’re going to tell them but, I’ll tell them that I wasn’t the one drinking!”

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