Tips for inflation and your house move
Posted by Christophe Meunier on
- Be prepared for mortgage pre-approval. Pre-approval is a great idea. Buyers can get a realistic estimate of their budget and financial capabilities. Sellers will also be able to view them as serious buyers. Pre-approvals are important in this market. Pre-approval is essential. Make sure your clients and you understand the differences between pre-qualification or pre-approval. Also, make sure all documents are available for when a house becomes available on the market. You don't need everything, but another buyer will.
- Buyers are exploring unique lender programs. Some mortgage lenders and creative start-ups are offering programs to help consumers compete. Although programs are subject to state laws, lenders may offer a guarantee up to a maximum for buyers with good credit. If buyers have the ability to afford more flexibility with their budgets than that guarantee, they may be able to cover the difference between the lender's value and the final sales price. Venture capital-backed companies, such as Ribbon from North Carolina, offer guaranteed cash transactions for a fee. This converts traditional buyers into cash buyers.
- An increase in escalation clauses. Multiple offers are now more common, and negotiation strategies have changed in response. Escalation clauses are becoming more popular. They tell the seller what your starting offer is and what you will accept if they make an offer above their asking price. This is the time for you and your clients to make the best offer possible. An escalation clause can help close the deal.
- Some buyers waive home inspection This is the truth. It hurts and it is painful to admit, but it is true. In order to be more appealing in multiple offers and secure the house, many buyers are willing to waive home inspections. We, and most real estate agents, would not recommend this step. Alternatives exist that can still make an offer appealing without taking on undue risks. These include walk-throughs or "information only" inspections. In these inspections the seller won't be required to pay for any problems found, but formal inspections are still done to protect the buyer.
- More buyers will waive the mortgage contingency. This is a risky move that many buyers are turning to if they can't accept the "all cash offer" card. If funding is not available after an offer has been accepted, it could result in the loss of an earnest money deposit. This risk is much greater if the offer exceeds the asking price or lenders challenge it. This is a large sum that you could lose in many states.
- Buyers are writing clauses to receive non-refundable earnest funds. As mentioned above, buyers will sometimes forfeit their earnest money if they cannot meet any contingencies. It may be worth it to sweeten the deal if their budget allows.
- Flexible closing times are an effective bargaining tool. The current market is flexible, so it's more likely that home buyers will accept offers. Some sellers want flexibility to allow them to close quickly or extend their closing time to make sure they move on to the next chapter. Flexibility is a powerful tool in the home-buying and moving process. Sellers have the option to choose how they want to move into their new home.