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Cover story: Strategies shift as buyers again face competition
Question of the Day
Mr. Moraru said an experienced Realtor can help buyers recognize value.
“It’s important to make an offer with your head and not your heart,” he said. “The more education you have, the easier that is.”
Making an offer
Once you’ve found the place you want to buy, you need to make the strongest possible offer. While some sellers will choose to accept an offer based solely on money, most choose the contract that appears most likely to result in a completed sale.
“Once you find the home you want, you need to be decisive and move quickly,” Mr. Moraru said. “Your buyer’s agent should ask the listing agent when they are reviewing offers. If you move fast enough, you can have a home inspection before you make an offer, and then you can waive the home-inspection contingency in your offer.”
Mr. Moraru said your listing agent should find out what’s important to the seller, such as flexibility on the move-in date or settlement date. A buyer willing to rent back the house for two months so the seller’s children can complete the school year may win out over a higher offer from a buyer who needs to move into the home immediately.
“Buying a home when there’s competition is a lot like dating,” Mr. Bolin said. “You need to win on both looks and personality. The ‘personality’ part is the fundamental issue of financing and down payment, but the ‘looks’ part doesn’t cost you anything. It can be as simple as making sure there are no mistakes in your contract. If there are mistakes or missing items in your offer, you don’t look like a serious buyer.”
Mr. Bolin said he always includes an offer summary sheet with his buyers’ contracts to make it easier for sellers and listing agents to see a concise version of the main points of the offer.
Along with the offer, you’ll need to include an earnest-money deposit. Mr. Moraru said a deposit of 3 percent of the sales price is customary in the D.C. area, so a deposit of 10 percent makes a statement to the sellers that you are a serious buyer.
The type of loan you choose also can make a difference to the seller. Generally, FHA and VA loan appraisals are more stringent than appraisals for conventional loans, Mr. Bolin said.
“A conventional loan with a down payment of at least 10 percent makes a stronger offer than an FHA loan,” Mr. Bolin said.
In addition to cash, buyers can make their offer more appealing by eliminating contingencies.
“If you’ve been given a full preapproval for a mortgage of $850,000 and you’re only borrowing $750,000, you can be pretty certain that you can waive the financing contingency,” Mr. Moraru said.
Buyers with plenty of cash may want to consider waiving the appraisal contingency, particularly if they are fairly confident about the market value of the property they wish to buy, Mr. Moraru said.
“If you don’t have enough cash to make up the difference between the appraised value and the sales price, then you can’t opt to waive the appraisal because you would be expected to pay the full price,” Mr. Moraru said.
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