In today’s marketplace, many buyers are finding themselves involved in multiple offer situations, bidding wars, and high levels of competition for nice- and nicely-priced homes. While money talks and offering a higher price is the obvious way to win a bidding war, there are many other approaches buyers can take to stand out and above the competition. One area that’s often not explored is using a lender to help with your offer and the follow up involved. Using the tips below, your lender can help you put your best foot forward in a bid to obtain your dream house, even in a competitive situation.
Work With a Reputable Lender
If you put in an offer to a listing agent and the name on the pre-approval is either unknown to the listing agent, or worse, the listing agent has had a bad experience with the lender, a buyer can find themself at an immediate disadvantage. On the flip side if a listing agent is familiar with a lender, LO, and has had good experiences in the past, you can bet that confidence will be passed along to the seller. With all other things being equal, working with a reputable lender that can give a seller some assurance that their pre-approval was done properly.
This is an area where shopping for the best rate can put you at a severe disadvantage. Many cut-rate internet lenders will offer tremendous rates, but are notorious for being home to new and inexperienced loan officers that don’t do a thorough pre-approval and have a poor track record of getting loans closed. While that advertised rate may be attractive to buyers, that no-name lender is a huge red flag to many listing agents. The best rate doesn’t mean anything if you don’t have a home to get a loan for.
Use a Loan Officer with Great Communication Skills
If your LO doesn’t answer the phone, rarely returns phone calls, and isn’t available outside of traditional banking hours, what’s going to happen when you find your dream home on a Saturday morning and need an updated pre-approval letter? Or what if the listing agent has questions about the pre-approval that only the lender can answer? A seller isn’t going to wait until the LO can be reached, especially if other offers are coming in from equally qualified buyers.
Even if a loan officer isn’t available 24/7, they should be receptive and responsive on evenings and weekends, because they tend to be some of the busiest times for the real estate industry. With the JM Loans team, clients have access to our personal cell phones and we encourage people to use them – late night calls and texts aren’t uncommon, and we understand the need for quick communication when your dream home is on the line.
Use the Buyer’s Best Program (DON’T put in an offer with just a prequalification)
There’s a huge difference between a pre-approval and pre-qualification, and a good listing agent is aware of the difference. If you’re just prequalified, your chances of being taken seriously are pretty low. A step above a prequal is a pre-approval. With a pre-approval, your lender will review your credit, income and asset documents, and likely put your loan application through an automated underwriting system. A pre-approved buyer is MUCH stronger than a pre-qualified borrower, and though many lenders will let you get away with a simple phone conversation before giving you a prequalification letter, don’t make the mistake of stopping there – request a full pre-approval at minimum.
Now if you really want to impress a seller and their agent, use a program like our buyer’s best program that will have you fully underwriting approved before you find your dream home. With Buyer’s Best, our underwriting team reviews everything from income to assets and puts their stamp of approval on your loan file pending only property specific information (appraisal, insurance, etc). Being pre-underwritten gives you about the same strength as a cash buyer, because once an underwriter has approved a buyer, there are no surprises left to pop up, so a seller can rest assured that if you’re underwriting approved, you’ll make it to the closing table on time.
Does Your Pre-Approval Letter Explain Your Pre-approval?
The purpose of a pre-approval letter is to give a seller confidence in your offer. However, many lenders leave your pre-approval as a mystery, simply stating “Mr/s Borrower has been preapproved up to a certain amount!” without stating what went into that pre-approval.
A good lender will let the seller know that your income documents have been reviewed, asset documents have been received and looked at, credit has been reviewed and qualified, and automated underwriting has been completed with “Approve” findings. This at the very least removes uncertainty as to whether your loan has been prequalified or preapproved, but it also shows that your lender knows what they’re doing and has gone above and beyond to make sure you’re a strong buyer.
Make Sure Your Lender Calls the Listing Agent
One way to stand out from the competition is to have a phone call from your lender go to the listing agent. Communication is a huge part of a real estate transaction, and if a listing agent knows your lender is available, receptive, competent, and open to communication, there will be a level of comfort that goes far beyond a pre-approval letter.
A phone call also gives the listing agent an opportunity to ask questions a seller may have, and a chance for your lender to emphasize your strength as a borrower and the lender’s strength in getting things done and done on time.
In an industry where “lack of communication” is frequently cited as a real estate agent’s biggest peeve, having a loan officer that is proactive in communication will give you an edge with all other things being equal.
Using the above tips, you can work with your lender to put your best foot forward with an offer on a new home and stand out amongst the competition who are settling on doing things the ‘usual’ way. As we previously mentioned, price is very important, but when all things are close or equal, having help from a lender in preparing and presenting an offer could be the difference between buying your dream home and missing out. If you have questions on preparing to buy a home, pre-approval (or better, pre-underwriting), or anything else homebuying-related, ask an expert here for an instant response!