Over the past 2 months my wife and I have been searching for a home in the Maple Grove, MN area with a price range around the $250,000 mark. We have put in an offer on a home just about every week for the past month and have yet to have an offer accepted. Our offers have ranged from full price with 3 percent seller paid closing cost to $5,000 over asking with minimal seller paid closing cost and we have been out bid each and every time. Needless to say, the housing market is very frustrating for us.
This frustrating housing market has given me some insight that I would like to share with other home buyers in an attempt to help them successfully bid on houses in this tough market.
Get Pre Approved
If you have been looking for a house and have not been pre-approved yet, you are wasting everybody’s time. A home seller simply will not consider your bid with so many other pre-qualified buyers making offers on their property. A pre-approval letter is essential in today’s market and it helps you understand how much you qualify for and helps you determine how much of a home you are comfortable with based on your monthly income.
Play with the Numbers
A good loan officer is capable of playing with the numbers to help you determine a strong offer that is beneficial to both you and the seller. Submitting a full price offer with the sellers paying 3 percent of closing costs is not likely to get you the home. Before submitting an offer you should talk with your loan officer and see what types of credits are available for a higher or lower interest rate. A higher interest rate gives buyers the ability to cover some closing costs with the credit they receive with a higher rate.
Additionally, don’t leave money on the table! The FHA requires a minimum down payment of 3.5 percent. If the credit for your interest rate shows you bringing in less than 3.5 percent to closing, reduce the amount of seller paid closing costs you are asking for, doing this will net the seller more cash and won’t harm your position one way or the other.
Play the Emotional Card
Believe it or not home sellers are human too! If you have a strong reason why you want to buy their house, they will listen. It’s not guaranteed that they will accept your offer but they may have empathy as they may have bought the house for the same reason and would rather sell the house to somebody they know will love and cherish the home as much as they did.
I hope these tips and ideas help you in your hunt for a new house. As always, if you are looking for a top notch loan officer, be sure to check out our featured lenders located right here in the Twin Cities.