25 Jun The Bibel Team Writing a Winning Offer When Buying a House

Here today to talk to you about writing a winning offer.

[Timestamp  00:09]:

Hey everyone, Eric Bible of the Bible team at Neo Home Loans. If you like the information that you see here today, please like, subscribe, follow.

[Timestamp  00:20]:

So today I want to talk to you guys about writing a winning offer. There’s no denying that we’re in a purchase market unlike anything we’ve seen. In videos past, we’ve talked about the supply issues coupled with demand. So, getting your offer accepted right now is more challenging than any other time in the past. As a buyer, positioning yourself upfront to ensure that the offer that you’re presenting to a seller is received in the best light. What my team and I have put forth, the procedures and the checks and balances have positioned it to where our buyers are getting their offers accepted as opposed to buyers that are working with other lenders. And really what we’re finding as a success story is around the crafting of the upfront approval. And we all hear in this industry, you know, get pre-approved, pre-qualified. Well unfortunately, there is not a baseline of a standard in our industry of what merits an upfront review of one’s income and asset position to be able to confidently make offers in an open market, knowing that the financing piece is in order.

[Timestamp  01:38]:

Something that we’re doing right now as a team is going through the approval process with the client. So gathering the upfront documents, going through reviewing one’s credit report, and understanding where the down payment is coming from. Really all the nuances within the financing scenario, but we’re taking it one step further and putting it in front of an underwriter upfront. So goes through our team, which has a lights out success rate, but we want to take it one step further to allow the consumer, the borrower, the client, to compete with cash offers. So we’re putting it in front of an underwriter and issuing an approval. So when the buyer goes out into market and starts making offers, they can remove their financing contingency. So really come to the seller and say, I am so confident that I can get financing on this property that we’re removing the financing contingency upfront.

[Timestamp 02:34]:

So it allows you the consumer to compete with those cash offers, which on a cash offer, they don’t have a finance contingency. So that’s really one angle that we’re looking at in the upfront analysis to ensure that the offer you’re presenting is a winning offer. Second piece that we’re looking at is around an appraisal gap strategy. So we talked about removing the financing contingency. Through an offer presentation, there is a contingency period. And really one of the detriments to a potential buyer from a seller’s eyes in a market like we’re seeing right now where it is a true seller’s market are the contingency period, the timelines around the contingency periods. And what contingencies are, are your ability as a buyer to have safeguards or stop gaps to where if you encounter an issue through the transaction, you the buyer can say, we’re not moving forward with this without putting your initial deposit in jeopardy.

[Timestamp  03:39]:

But on the seller side, when those contingency periods are one in place, but two, longer or default to the contract period timelines, to the seller, they’re anxious. They are worried that the transaction is going to fall apart, or the financing is not going to come together, or the appraisal is going to cause an issue. So for the seller, if you come forward with longer contingencies or all your contingencies in place, they’re going to be more reluctant to take your offer and, and lean on someone that may be presenting a cash offer. So like we discussed before around the removal of your financing contingency with having a fully documented pre-approval upfront, another element is the removal of the appraisal contingency. So here with that, what you’re telling the seller is that, I am so confident in buying your house at this specified purchase price that in the event that the appraisal comes back short, I’m still willing to move forward based on these parameters.

[Timestamp  04:49]:

So what we advise in this scenario, similar to the removal of the financing contingency and in this instance removal of the appraisal contingency, is around an appraisal gap strategy. So right now, as we’ve discussed in previous content, we are in truly an unseen, unexperienced market where values are exponentially growing, and it’s being fueled right now by an under supply. So the appraisal process in whole works as a look back, not a look forward, not an interpretation of what the market is doing in today’s context. So there are instances where an appraisal may not align with the purchase price. And again, it’s for, for a number of reasons. It could be that there are no recent comparable sales that satisfy that purchase price. Maybe there hasn’t been a home that’s sold in that area for the last year or two years, whatever that time looks like. And keep in mind the market today versus six months ago, 12 months ago, 18 months ago, whatever time frame looking back that the comparable sales are there, it’s a completely different market. We’ve seen appreciation numbers, so increase in value, really unlike anything we’ve seen in the past. And again, fueled by high demand, low supply.

[Timestamp  06:16]:

So what we are advising our clients again, to assist with writing a winning offer is the removal of the appraisal contingency and having the discussion up front with the technology that we utilize of in the event that this home does not appraise for this value, we have a strategy that one, keeps the cash to close the exact same and two, payment difference is very minimal. So allowing the consumer to know, okay, we want this house. This is the house we want. Maybe we’ve been on another property where we lost. And yes, we saw it close at a higher price than we had offered. So here we’re going all out and we want to make sure that our offer gets accepted, but there may be some push with the appraisal piece. So identifying what we’ve defined as an appraisal gap strategy, where if that comes in below this purchase price, we’re not having to increase the amount of money that you have to bring to the table or the payment relatively stays the same. So, those components together is where we have experienced a tremendous amount of success in helping our clients get their offers accepted. So really, truly setting the stage to assisting with them writing the winning offer. We would love the opportunity to assist with writing your winning offer today, please call my team and me.