After months of business closures and strict social distancing measures, the Baltimore area is finally starting to open back up. The spring real estate market was much slower than was anticipated, but all-time low interest rates have led to a surprisingly busy summer market. That means if you’re in the market, you might need to know how to stand out as a buyer.
A Little Preparation Can Help You Stand Out as a Buyer
Many would-be buyers, urged on by low interest rates and reopening businesses, have jumped into the home search without a lot of preparation. As a serious buyer, your job is to show sellers that you’re a better choice than a buyer who just popped onto Zillow. And honestly, all it takes is a little preparation. Here’s how to stand out as a buyer in a competitive market.
Getting preapproved for a loan is always recommended. In a competitive market, preapproval is almost a requirement. In fact, many agents and sellers won’t even work with a buyer unless they’re preapproved. By submitting a letter of preapproval with an offer, you show sellers that you’re serious—and you have a bank backing your offer.
Getting preapproved for a loan isn’t difficult, and most of the time, it doesn’t tether you to one lender. Most lenders will initiate the process from first phone call or contact. It just takes a little paperwork on your part. The lender will run your credit, review your financial information, and get back to you with an estimate of how much their bank is willing to lend you.
Increase your earnest money
When submitting an offer on a home, you’ll include a check, usually in the ballpark of $1,000 – $5,000, with your Purchase and Sale Agreement. This earnest money shows the seller that you’re serious about buying the home. If the seller accepts your offer, the money is put into an escrow account and is applied to your closing costs at the end of the sale.
If you want to stand out from other buyers, and show sellers you’re really serious about purchasing their property, consider increasing the earnest deposit. Remember, this money goes towards your closing costs if everything works out with the sale, so you’re really not paying any more in the long run.
Shorten your closing time
A typical closing window is usually around 30 – 45 days or more. If you’ll be using a mortgage to buy a home, 30 days is probably the minimum you’ll be able to get approved and close. But if you feel able to quickly get your ducks in a row, you might want to offer that 30-day window, as many buyers won’t be able to make such a short turnaround.
Typically, between the offer acceptance and the close, there’s an inspection, an appraisal, and a lot of paperwork. The inspection your agent will likely schedule, though you’ll probably want to be there for it, and the appraisal should be handled by your bank. Your biggest task will be finding and turning in paperwork to your lender to finish the loan approval process.
Cut back on contingencies
While there are certain contingencies you probably want to include, like a financing contingency and an inspection, there may be others you can eliminate from your offer. For example, you may be able to forego the appraisal contingency, which simply means if the home doesn’t appraise for as much as the loan, you won’t require the seller to drop the price (since the bank probably won’t finance more than the home’s value) and will instead pay the difference out of pocket.
Write a buyer’s letter
Real estate, like any major financial sale, is ultimately a business transaction. But unlike most other sales, real estate is also very personal, too. A house isn’t just a house—it’s a home. It’s a place where many memories have been made, and for most sellers, moving is much more than an emotionless business transaction.
Including a buyer’s letter can give you the opportunity to introduce yourself to the seller as a person. Tell the seller your story. Why are you moving? What drew you to their home? How do you see your life unfolding in this new home? This is your chance to appeal to the seller on a personal and emotional level.
Thinking of Buying a Home in the Crofton Area?
Are you thinking of buying a home or relocating to the Crofton area? I’d love to help! Contact me, Kyle McCarthy, today to learn more about how I can help you find the perfect home that suits your needs.