5 Ways to Outsmart the Competition in a Competitive Market
In this challenging housing environment where rates are ticking up and inventory is at a minimum, it pays to understand different options that may give buyers a competitive edge.
1 Escalation Clause
An escalation clause states that the buyer is willing to outbid other offers by a certain amount up to a capped price. While this may strengthen an offer, there are some things to look out for. Both agents and the seller need to understand the clause and how it works. Be sure other offers are legitimate (bona fide). The increase needs to be realistic (is $1000 over highest bid going to be enough to motivate sellers?) especially if there are other important issues for sellers to negotiate, for example the closing date. Don’t forget the appraisal, if it comes in too low that could create other problems for you or your client.
2 Hire a Home Inspector
More frequently buyers are hiring a home inspector for the day to attend open houses with them. The benefit is that buyers may decide to wave inspection contingency, making for a stronger offer.
3 Waving Mortgage Contingency
By waving the mortgage contingency, a buyer is stating they will forfeit their deposit if they cannot qualify for financing. This does make an offer more appealing, but is a risk for the buyer. One way to minimize that risk may be through Fairway’s TBD program, see below.
4 TBD Program
With Fairway’s TBD (or 321 Go! Program) buyers will have an underwriter’s approval upfront, ensuring they are a better candidate and are ready to close, pending the property appraisal. Buyers go through the underwriting process, and begin house hunting securely, knowing that once they find a home, they can go under contract and order the appraisal. Next thing you know, you are clear-to-close! Contact your Fairway loan officer to learn more.
5 Cash purchase/refi
Finally, if buyers are able to make a cash purchase, they always have the option of refinancing after the fact to pull their cash back out of the house. Buyers should speak with a lender before doing this to understand the full process and timing.
As always, Fairway is here to help answer any questions and get you pre-approved! Contact a loan originator near you today.
The material provided in this newsletter is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.