The housing market is heating up, the buyers are out, mortgage rates still sit at record lows, housing prices are still grounded, but the market is moving from a buyers market to a seller’s market. It seems like we went to sleep to a buyers benefit and woke up to a sellers dream, that is literally how fast the changeover occurred.
In the past you made a decision to purchase a property, then you started looking at all of the real estate ads. Then realtors told you to have one leg up on another buyer, you needed to get pre-qualified. This would at least give you an idea if you really can afford the home of your dreams. Now to bid on a home ( submit an offer to purchase ), you really should be pre-approved. The difference ?
- Pre-qualification – basically a mortgage broker asks simple questions of the buyers, such as income level and current loan commitments such as car loans and possibly a current mortgage. This helps to determine how much of a home you can purchase ( the dollar amount )
* Many times with just a prequal letter, the lender puts you at their mercy knowing that time is of the essence. Basically once you sign the contract, you need to find a lender immediately to meet contingency commitments of the contract
- Pre-approval – this is where you actually submit proof of income and all financial obligations and a credit report is pulled. With rates still so low, many buyers also start here to move towards a commitment quicker, allowing the buyer to lock in to a specific rate. With the change in times – this is the way to start.
* Pre-approval saves time spent looking at homes you can not afford
* Buyers can normally close quicker since most of the paperwork is done
* When multiple offers are placed on a home you like, a pre-approval letter just may give you the edge you need
As one attorney just told me ” The best offer on the table is not always the highest offer.” We were talking about a couple of offers that were presented on a property. The first offer has a large down payment and the buyer already had secured a pre-approval on the balance. The second offer was cash for a couple thousand more. ( I know you think the second offer was much better. ) The sellers attorney recommended that a stipulation with the second offer be presented. Just because someone says they have funds available does not necessarily mean they are liquid ( available on short notice ). So instead of an acceptance of the offer from the second buyer, a counter was given that stated ” Buyer must have funds put into escrow within two business days.” As things turned out, the first offer was the one that actually worked out.
Many times cash buyers assume because they can put cash on the table, the seller will just turn over for them. However, if the seller has a highly desirable property, it may be financially strategic for them to take a higher offer with a mortgage contingency. the buyer is indeed pre-approved, the process between the two offers can be as little as two weeks in time.
So for serious buyers, make sure that you are pre-approved or have qualified funds that can be withdrawn on a short notice. And when you are serious about purchasing your lake property, give me a call to start looking at the lake homes for sale on Keuka, Canandaigua or Seneca Lakes.
This information brought to you by Mary St. George Realtor, Associate Broker, Wine Trail Properties, 315-719-8377