The real estate market is sizzling. Woe the customer who needs financing to buy a home, who has to compete with cash buyers.
If sellers had a heart and wanted to give equal opportunity to someone who is actually going to live in the property, versus a cash investor, things would not look so bleak for buyers who need financing. Not all cash buyers are investors, yet they are often able to negotiate a price discount. There is a downside to an increase in tenant occupied homes in a given neighborhood. Government owned properties are, at least initially, offered exclusively to buyer's who intend to live in the home. Yet sellers whose properties are non-conforming may not have a choice. Non-permitted additions and upgrades may render their properties unfriendly so far as lenders are concerned.
So what can a buyer do? They can write "clean" offers.
- Forget contingencies to sell another home - that is so 2011 - buyer need to sell their current home first and move twice if necessary.
- Shorten inspection times - the Calif. Assoc. of Realtors boilerplate contract allows 17 days. A qualified inspector can be scheduled within a day or two. Especially if the home appears to be well maintained, a seller may think a 17 day period is an unreasonable amount of time for their property to be tied up under contract. 10 days are usually more than enough time for inspections.
- Keep the options to a minimum. If the seller is offering to include their refrigerator, fine. A buyer shouldn't ask for personal items unless there was a prior discussion about the inclusion of such items. Don't ask for the seller's family heirlooms.
- ]Include a "pre-approval'' (not a pre-qualification) from the actual underwriter. When comparing offers, the seller will consider a pre-qual from a mortgage broker just a cursory notion that a buyer has a chance of getting a loan. An actual approval from an underwriter is stronger.
- By all means, provide a verification of funds needed for the down-payment plus closing costs.
That's for starters. It helps for a buyer to work with an agent who has years of experience who can best represent their strengths. I am always amazed when I see offers without a cover letter written by the buyer's agent. An agent who has previously sold in the neighborhood where the property is located can project confidence about the price the buyer is offering in relation to the comparable sales. Happy hunting!