Three Ways to Avoid Getting Outbid on Your New Home
As housing inventories remain constrained in many markets, some buyers may face increased competition and more bidding wars heading into the spring-selling season. Bidding for a new home can get pretty fierce in today's market. Here are three potential solutions to avoid getting outbid on your new home:
- Turn in your loan paperwork BEFORE you place an offer. In many cases, you are bidding against cash buyers who don't need to wait for financing approvals. Look at it this way: if you were the seller, would you prefer to do business with a buyer who needs to wait for financing approvals, or a cash buyer who can close the deal quickly? With that in mind, it's important to be proactive and provide your mortgage lender with things like your source of down payment funds, your asset documentation, your credit report and your income documentation. This way, you'll be in a better position to close the deal quickly and compete with those cash buyers.
- Pay cash, but do it right. Keep in mind that you only have 90 days after closing to place a mortgage on a property that you bought with cash if you want to secure your tax deduction. (For more info, see my article entitled, 90 Day Rule for Cash Buyers.) In order to get that loan approval after closing, you'll need to document the source of funds that you used for your cash purchase. Talk to me for more details so that you can avoid problems down the road.
- Write your offer correctly to begin with. Mortgage lenders are implementing some pretty significant changes this year to the legal requirements for mortgage paperwork as part of the Dodd-Frank Act. When real estate agents and loan officers aren't familiar with some of these changes, it causes unecessary delays in the loan process. That's why it's important to work with someone like myself who keeps up to date on all the new requirements. I can work with your real estate agent to make sure you write your offer correctly in the beginning, so that you won't have to redo the paperwork and delay the closing.
Contact me so that we can further explore any/all of these ideas together!