The U.S. housing market is still humming along, which means that home sellers in many regions are still getting multiple offers. For home buyers, this means putting your best foot forward if you want to make your offer stand out from the rest.

6 Ways to Make Your Offer Stand Out from the Rest

  1. Walk in with home loan pre-approval to make your offer stand out from the rest.

Nothing says “I’m serious” about buying a home than having completed the mortgage pre-approval process ahead of time. When your offer includes a pre-approval letter from your mortgage lender, home sellers know that you are ready, willing and able to make the deal go through.

Conversely, home buyers who haven’t completed the full pre-approval process (even if they have been pre-qualified) may make an offer that their lender ultimately won’t agree to. This can easily send the home seller back to square one and may even cause a home buyer to forfeit their earnest money deposit.

 

Comparing Pre-Qualified vs. Pre-Approved Home Buyers
PRE-QUALIFIED PRE-APPROVED
Filled out / completed a mortgage application X
Credit history check completed X
Finances reviewed X
Down-payment estimated X
Specific amount offered by lender X
Lender provides interest rate information X

 

You can see how much more “ready” home buyers who have been pre-approved for a home loan are vs. those who have only been pre-qualified or who have not even contacted their lender yet. If you’re working with a real estate agent but haven’t yet chosen a lender, your realtor could point you to a mortgage company they have experience with, who can help you get the pre-approval process completed before you make an offer.

  1. Put down a serious earnest money deposit.

The very definition of “earnest” includes the idea of being transparent, genuine and serious about something!

earnest – adjective – characterized by or proceeding from an intense and serious state of mind

When used as a noun, it is also defined as a considerable or impressive degree or amount. In a slow  home-buying market, buyers can make small earnest money deposits. In a hot market or seller’s market – not so much. Putting down a high earnest money deposit tells home sellers that you’re serious about their property. It sends a message that you’re not holding back in order to make multiple offers on different properties (homebuyinginstitute.com).

Your real estate agent can advise you about how to make your earnest money deposit as competitive as possible, and about how to make your offer as a whole as competitive as it can be.

  1. Connect emotionally to make your offer stand out from the rest.

It’s common for home sellers to receive letters from buyers who are especially interested in “winning” when it comes to a multiple-offer bidding war. Tell the homeowner why this property matters so much to you, what makes it special to you, how you can see yourself living there.

When touring the home, you might have even seen belongings in the home that give you an idea of the home seller’s future aspirations or something in their past that you might share. Put it in the letter! Give the seller reasons to prefer your offer in a multiple offer bidding war scenario.

  1. Include an escalation offer.

In a situation where you know there are multiple offers, you can include an escalation offer in your bid. This tells the seller exactly how much you are willing (and able) to pay for the home. An example of this would be to offer $2,000 more than the highest offer submitted up to the limit you feel comfortable with. If you make an offer on a home that is listed for significantly less than amount for which your mortgage lender pre-approved you, you have some room to include an escalation offer in your bid.

Bear in mind, though, that the home’s appraisal may be a factor. If the home isn’t likely to appraise for the amount you would have to pay for the home, the lender may only be willing to lend the amount for which the home appraises. In that case you would need to be prepared to put more money down at the time the home loan closes to make up the difference.

  1. Forego inspections and contingencies and pay more closing costs.

It’s common to include a request for home inspection in any offer to buy a house. However, for the sellers, this might reveal the need for repairs or updates they would be asked to complete or fund before the home sale would close. Offering to pay for the home inspection (or even some of the seller’s closing costs) and forego any minor items found could encourage a seller to work with you instead of other home buyers.

  1. Be ready to move… or not.

The faster the home sale process can move, the faster the seller can move on. If you’re pre-approved for the mortgage that speeds up the process from the get-go. If you can also offer to take possession quickly this might be a bonus for the seller. Conversely, if the seller needs more time to pack up and move out, offering to wait and work on their time schedule could help your offer stand out from the rest.

You may also like: 4 Signs You’re Ready to Buy a Home

The VA home loan offers some unbeatable benefits for active military members and veterans. From $0 down, to no mortgage insurance, to relaxed credit requirements, the VA home loan is definitely worth exploring while searching for a home. Here are the top 4 benefits of the VA home loan.

Top Benefits of the VA Home Loan

$0 Down Payment

The down payment is typically the most challenging hurdle for prospective home buyers, especially first-time home buyers. Qualified veterans can obtain a VA home loan without making any down payment at all. Compared to Conventional and FHA home loans, this translates to significant savings upfront. Conventional home loans typically require at least 10 if not 20 percent down, while FHA home loans require at least 3.5 percent down. The amazing benefit of being able to purchase a home with $0 down is that veterans get to fulfill the American Dream without having to spend years saving up for a down payment.

No Mortgage Insurance

A lot of first-time home buyers are going with an FHA loan since the down payment required is 3.5% (as opposed to the conventional 10 or 20 percent). The down side to paying 3.5% down is that it comes with mortgage insurance of a few hundred dollars a month (depending on the loan amount). The VA home loan doesn’t require monthly mortgage insurance. Skipping the monthly mortgage insurance will help veteran home buyers save hundreds of dollars per month.

Low Interest Rates

Typically, the VA home loan offer the lowest interest rate of all loan types. Since the VA guarantees a portion of every VA loan, financial institutions can offer lower interest rates than other loan types (0.5 to 1 percent lower than conventional rates). On a 30 year $250,000 loans, the difference between paying 4 percent and 4.75 percent equates to $40,000 in savings over the life of the loan. This is one of the top benefits of the VA Home Loan.

Flexible Credit Requirements

Veterans don’t need a perfect score to secure home financing. In fact, the flexibility of credit score allows more veterans to secure a home loan than if they went with a conventional loan. Some lenders allow scores as low as 580 which is significantly lower than the 620 minimum score for other loan types. The flexibility of credit requirements allows veterans to buy a home faster as they don’t need to spend years on credit repair.

You may also like: Financial Benefits of Owning a Home

Buying a home is 38% cheaper than renting a home. This is especially true if you plan on living in one space for at least seven years. As mortgage loans are more affordable now with down payment assistance and different loan options, let’s take a look at the financial benefits of owning a home.

Financial Benefits of Owning a Home

Building equity

One of the largest financial benefits of owning a home is building home equity. When you pay rent to your landlord, you’re setting aside a chunk of money that you’ll never see again. Additionally, landlords have the right to raise your monthly rent yearly, so what you pay today could differ than what you pay monthly next year. When you sign a mortgage loan, you are agreeing to the monthly payment for the life of the loan (likely 15/30 years). So, you can accurately budget your spending every month on your mortgage. When you pay your mortgage, you are building equity as you are paying off your loan. This means that unlike renting, you will see these funds applied directly toward what you own.

Tax benefits

Another one of the biggest financial benefits of owning a home is the mortgage interest deduction. Most of your monthly mortgage payments will go towards interest in your first few years of homeownership. You are able to deduct that interest from your taxes, if your loan is $1 million or less. Additionally, any taxes you pay to the government on your property are deductible from federal income tax.

No longer moving every year

Homeownership increases sustainability and stability. While moving every year from rental to rental may be necessary for your lifestyle, it is a major inconvenience and a financial and emotional burden. Renting can mean you may never know where you are going to live in a year, or how much you’ll be paying. Owning a home allows a financial and emotional investment in both your physical home and your community.

Use your home investment toward another investment

The equity that comes from paying a mortgage is what allows many individuals make future investments in the same home (refinancing, renovations), a higher-valued home (using the equity toward a down payment), a second home (using equity toward a second down payment), or additional financial goals (paying off debt, buying an RV). A home equity line of credit helps homeowners use that part of their home that’s already paid off to obtain financing for additional investments.

You may also like: 4 Benefits of Using a Real Estate Agent

In the last two decades, real estate has outperformed the stock market at a ratio of 2:1. Real estate has continuously been ranked as the best way to invest money not needed for more than 10 years. So why aren’t more people taking advantage? Here are the 5 top reasons to invest in real estate.

5 Reasons to Invest in Real Estate

Immediate cash flow

Once you buy a property and rent it out, you are receiving cash flow within that first month, and every money after that. If you buy in a hot market, you’re able to use the cash flow to pay back that mortgage as well as use the additional funds for repairs, paying a property management company, or any other house related expense.

Appreciation

While appreciation is largely dependent on property, location and economy, the bottom line is that the US population is growing and the need for housing continues to increase. By way of supply and demand, your home’s value will increase over time. For example, since the inventory of homes in Western Washington is in a shortage, buyers will be willing to pay more for your home since there isn’t much competition.

Equity

If you make paying off your mortgage a priority, the amount of equity – or the amount of house you actually own – grows quickly. If you pay more toward your principal, choose shorter loan terms, and focus on home improvements, you can speed up the pay off process. By paying more toward your principal, the faster your build equity, even if your home is appreciating slowly. By choosing shorter loan terms, you are eliminating the interest rate for the years you aren’t paying a mortgage. For example, a 15 year mortgage is more per month, but over time you actually save a significant amount since you aren’t paying interest on the last 15 years. Finally, by focusing on home improvements, you increase the value of your home and narrow the gap between how much it’s worth, and how much you owe.

Tax breaks

Investing in real estate can come with tax breaks, which makes this one of the top reasons to invest in real estate. Mortgage interest, operating costs, property taxes, and insurance are among the areas you’re able to deduct from your taxes. You’re sending less money to the IRS, and increasing your cash flow.

You don’t have to be the landlord

If you buy an investment property with the idea of just wanting the monthly income without doing the maintenance, a property management company can help you. When you hire a property management company, they can take calls about leaky faucets and drafty windows. Yes you’ll be receiving less monthly income since you’ll have to pay the property management company, but you’ll have much less to worry about. This is an especially good idea for those who buy a rental out of state.

You may also like: 4 Reasons to Buy a Home This Fall