Tips for Buyers in a Seller’s Market

Don’t let your dream home slip through your fingers. A solid pre-approval letter will give you a leg up.

Getting preapproved and having a dependable, air-tight written pre-approval from a respectable lender could never be more important than it is today.

In what is called “a seller’s market” multiple offers are being made days and sometimes hours after a property is listed on the market. We have seen purchase agreements that are tens of thousands of dollars more than list price.

This seller’s market has created some unique challenges that serious buyers need to be prepared for.

1. Standing out among the crowd. Anytime you have a competitive situation, you want your offer to stand out among all the others. The best way to do this is to submit your pre-approval letter with the offer. At a minimum, the pre-approval letter should tell the seller that the lender has reviewed your credit, income and assets.

2. Seller concessions. For a long time, seller concessions (i.e. a clause where the seller contributes to the buyers closing costs and prepaid costs) have been common place. However, in this market, sellers are getting more reluctant to except those terms. Aside from this reducing the net proceeds to the seller, sellers understand that many appraisals are not coming in at the contract price. Until comparable sales catch up with the market, this may prove to be an issue.

3. Large earnest money deposit. Another attractive strategy for buyers is to put down a large earnest money deposit. This says to the seller that you are serious about their house and are willing to put money on the table. If The buyer decides to walk away from this agreement, they would lose those funds. I have also recently seen buyers agree to have an earnest money deposit being non-refundable for any reason if buyer does not obtain financing.

4. Quick close date. Buyers are offering to close their transaction faster than other offers. This is attractive to a seller that is trying to purchase another property. Unfortunately, those promises are dependent on more than just the lender. To get from start to finish on a closing, there must be cooperation from appraisers, title companies, realtors, borrowers, sellers, as well as the lender. Nevertheless, in this market it has never been more important to have a lender that has all of their ducks in a row so that the buyer can get to the closing table as quickly as possible.

5. The added phone call. For many of my clients, I will personally call the listing agent after I send a pre-approval letter to let them know that this buyer is good to go. It’s amazing how far that will go to get your offer excepted.

6. Out of town or unknown lender. I’ve heard multiple realtors tell me that they do not except pre-approval letters from lenders they are not familiar with. Right or wrong, this is an important reason to get approved from a local reputable lender.

In a market where your pre-approval is more important than ever, it is imperative that borrowers connect early and thoroughly with the right lender. We’re here to help!

Can I change jobs while buying a house?

After you’re pre-approved for a mortgage loan, any drastic changes to your credit score, debt and income can quickly derail the process.

When possible, we suggest our buyers avoid job changes, making big purchases and opening new lines of credit until after their loan closes.

If you’re interested in buying a new home or refinancing your current mortgage – and you’re contemplating a career change – here are a few things you should know.

Before Applying for a Mortgage

Sometimes, job changes are unavoidable. If you’re on the hunt for a new job, for one reason or another, we recommend that you get settled before applying for a mortgage.

You’ll be asked to submit pay stubs for approval, so it’s best to wait 30 days before reaching out to a lender about financing. Most jobs changes should not impact your mortgage application if you haven’t applied for a mortgage yet.

According to industry experts, “You still need income that is reliable, stable and likely to continue in the future. And your new job should be an upward – or at least lateral – move within the same industry. As long as those criteria are met, changing jobs before you buy a house shouldn’t be a problem.”

While You’re in Process

When you apply for a mortgage, you’re approved based on the information you submit. If anything changes throughout the process – your income, debts, assets – please let your Loan Officer know immediately.

When you change jobs applying for a loan, we will have to start over again at the beginning. New documentation will need to be collected and your debt-to-income will need to be recalculated.

Best case scenario, you’re approved based on your new job after a short delay.

Worst case scenario, you’re denied based on your rate of pay or pay structure.   

After the Loan Closes

After your loan closes, and you have the keys for your new home in hand, you’re free to change jobs. We will not reopen your loan or verify your income unless you reach out about refinancing in the future.

Your job change may impact your ability to refinance at a later date, but we can tackle that when the time is right.

Other Factors to Consider

Promotions: If you receive a promotion from your current company while in process, no need to worry! If your salaried or hourly rate-of-pay is increasing, and your pay structure is not changing, a promotion will likely increase your buying power.

Changes in Pay Structure: Commissioned employees may have the ability to earn more, but this pay structure can also complicate the mortgage process. Often times, commission pay cannot be counted as income unless it has been received for 12-24 months. The same is true for bonuses received.

If you have additional questions about your employment status and its impact on the mortgage process, give us a call. We’re happy to help in any way we can!