Bidding Wars – Buyers be Ready!

Are you ready to enter on this real estate market?

I have been on the listing side and the buyers’ side of multiple offer situations countless times and believe me, neither are fun.   My recent listing at 53 Turnstone Dr in Attleboro had 40 showing requests in less than 24 hours of being on the market.  One day of showings produced 15 offers from ready and willing buyers by 11:00am the next morning.

It took hours to go through each offer individually as we evaluated the:

  • offer price
  • dates 
  • deposits
  • contingencies
  • personal letters to the seller
  • escalation clauses
  • and mortgage pre-approval and pre-qualification letters.

When sellers review offers, know that the highest offer price does not always “win”.   All of the terms of the offer and buyers’ qualifications must be considered both when writing up a contract as a buyer and when reviewing an offer contract as a seller.

Want to know the three best ways to position yourself as a strong, sought after buyer amidst a sea of buyers and very few listings?

 1. Work with a full-time, experienced, and respected agent who will have the knowledge and reputation to present an offer and “you” in a way that the sellers and sellers’ agent will take seriously.  You want the sellers’ side to feel confident that you are the right buyer.

Buyers need to be prepared

2.  Get pre-approved now!  Do not wait until you find a home to contact a mortgage officer.  Experienced listing agents know the difference between a pre-approval that has been vetted with buyer documentation and a pre-qualification letter that is just based on a phone conversation with a lender.  Good listing agents will always call mortgage officers to make sure the buyers are solid.  It is always in your best interest to use a full time, experienced, and respected mortgage officer and company as well.  Let me know if I can send you some names!!

3.  If you own a home and your home purchase is going to be contingent upon it selling, you need to list your home NOW.  In almost all cases, sellers will move your offer to the bottom of the pile as soon as they see a “contingent upon the sale of buyer’s house”.  Some will consider you if you have a signed P&S on your home, but some will still see that as a risk since they have to worry about you as a buyer and your buyer.  As a back up plan, it may be worth checking with your mortgage officer to see if could purchase your next home without selling your current one first.  If a down-payment is tied up in the equity of your current home, a cash-out refinance may be an option for you.  (FYI – a refinance must be completed before listing your current home or moving forward on a loan application for a new home.)  Best plan… contact your mortgage officer and a contact qualified experienced real estate agent. 

It is my true pleasure to  work hard for my clients and your referrals throughout Massachusetts and Rhode Island.  Please let me know what questions you may have and how I can be of the best assistance to you.

Jen McMorran, Realtor Jennifer McMorran, Realtor, SRES
New Construction & First Time Home Buyer Specialist
MA & RI Licensed Real Estate Sales Associate
New Homes Team Kensington Real Estate Brokerage
508-930-5259
Jen.McMorran@gmail.com
www.jenmcmorran.realtor
real people. real estate.  Best 5 Icon Logo
Serving clients throughout Massachusetts & Rhode Island. Boston – Attleboro – Providence and the communities in between.

Basics of Buying a Home

MAR LogoThe Massachusetts Association of Realtors is such a wonderful resource for agents and consumers.  Check out the buying process – “simplified”.

10 Steps to Buying a Home

1`. Are you ready to buy and own a home?Family Home Purchase
2. Get a handle on your credit score

3. Get pre-approved for a mortgage
4. Determine what you can afford
5. Decide what you want in a house
6. Get help and consider working with a REALTOR®
7. Make an offer
8. Home inspection
9. Purchase & sale agreement

10. The closing

 

  1. Are you ready to buy and own a home?

This might seem like a simple question, but there is a lot to owning a home. There is the actual process of buying the home to the demands of being a home owner. If you are prepared and owning a home is right for you, then follow these next steps.

  1. Get a handle on your credit score

The vast majority of home buyers need a mortgage loan to buy a home, but because of the recent financial crisis, securing financing can be difficult.  Lenders make their decision on whether to issue a loan based on the likelihood they will be paid back. To do this, they look at your credit score.  The higher your credit score, the better chance you have for obtaining financing. Unfortunately, there can be errors on your credit reports that can impact your credit score. To prevent this, make sure to obtain your credit report from any of the three credit reporting companies (Equifax, Experian and TransUnion) and correct any errors prior to applying for a mortgage. https://www.annualcreditreport.com

  1. Get pre-approved for a mortgage

“Pre-approval” means you have met with a loan officer, your credit files have been reviewed and the loan officer believes you can readily qualify for a given loan amount with one or more specific mortgage programs. Based on this information, the lender will provide a pre-approval letter, which shows your borrowing power and that you have the ability to go through with a purchase.

  1. Determine what you can afford

While getting a pre-approval letter is an important step, determining what you can afford is a personal decision. Only you know what feels comfortable. Remember, in addition to your loan payment (that includes principal, interest, taxes and insurance) there are also heating and cooling costs, water and sewer bills and potentially maintenance and association fees.

  1. Decide what you want in a house

Make a list of the features and benefits you want in a home. Consider such things as pricing, location, size, schools, amenities and design. Consider your priorities. If you can’t get a home at your price with all the features you want, then what features are most important? For instance, would you trade fewer bedrooms for a larger kitchen or a longer commute for a bigger lot and lower cost? Finally, consider your needs in several years.

  1. Get help and consider working with a REALTOR®

A local REALTOR® truly knows the local market. They have been in many of the houses that are for sale in the market that you have seen online. They understand why certain homes in certain neighborhoods are priced the way they are.  They are also in the best position to help you find the house that most closely matches what you want in a home. Most importantly, a REALTOR® will be looking out for your interests

  1. Make an offer

Once you have found a house that you would like to buy, you need to make an offer to the owner. In a typical situation, you will complete an offer along with a $1,000 deposit that your REALTOR® will present to the owner and the owner’s representative. The owner, in turn may accept the offer, reject it or make a counter-offer. The owner’s response will determine your next step. (Please note: In some markets, it is not unusual to go directly to signing a purchase & sale agreement. Working with a local REALTOR® will be able to easily guide you through the process)

  1. Home inspection

After your offer is accepted, it is routine to have a home inspection. During these examinations, a licensed inspector determines if there are material physical defects and whether expensive repairs and replacements are likely to be required in the next few years. Such inspections for a single-family home often require two or three hours, and you should attend. This is an opportunity to examine the property’s mechanics and structure, ask questions and learn far more about the property than is possible with an informal walk-through.

  1. Purchase & sale agreement

Provided you are satisfied with the home inspection, the next step is to sign a purchase & sale agreement. This document details the specifics of the transaction, such as: repairs to be completed; fixtures to remain with the property the property’s status regarding lead paint; and, if a septic system exists, the confirmation of a Title 5 certificate (in Massachusetts).  The closing date is finalized and a five percent deposit is made (which is held in escrow until the closing). If you have any questions about your legal rights or responsibilities, you should consider consulting an attorney.

  1. The closing

This is the day when you will become a home owner, but there are several steps that are necessary. Prior to closing you will have a walk-through of the home you are buying. This is to make sure repairs (if any) were made and that the house is in the same or better condition than when you made the offer. Most lenders will require that you have a home owner’s insurance binder (proof of insurance) before they will close the loan. Many buyers also purchase title insurance that is bought with a one-time fee at closing. Title insurance protects owners in the event that title to the property is found to be invalid. After signing the loan documents (and there are many), the sellers will receive the remainder of the payment from the closing attorney and you’ll be handed the keys.

Disclaimer:
These steps are intended to provide a general guideline on how the home buying process works, however every transaction can have its own special situations or circumstances and might not be covered in this document. This publication is intended for educational use only. Opinion or suggestions in this publication do not necessarily represent the official policies or positions of the Massachusetts Association of REALTORS®.   The Massachusetts Association of REALTORS® does not accept responsibility for any misinterpretation or misapplication by the reader of the information contained in this article.  The publishing of this material does not constitute the practice of law nor does it attempt to provide legal advice concerning any specific factual situation.  FOR ADVICE ON SPECIFIC LEGAL PROBLEMS CONSULT LEGAL COUNSEL.