Buying a Home and The Value of Having Us Help You Get Pre-Approved
Before you STart: Get Your Finances in Order
It's very important to know what you can afford before looking at potential homes to purchase. Failure to do so will only increase stress as well as the probability for disappointment. More often than not, what you think you can afford does not fall in line with what a Lender says you can afford. Today's market is very competitive due to the lack of available homes for sale. I don't see this changing any time soon as the infrastructure for our surrounding Southern California communities are already heavily strained by the ever growing population. Traffic and how to alleviate it have become major talking points no matter where you live. With less build-able land, new construction has little chance of keeping up with demand.
benefits of being Pre-Approved
Due to the frequency of multiple bids on individual properties for sales, Sellers can now be more selective with regards to the offers they choose. Basic economics tells us that if several people want the same thing, the value of that thing rises. The terms of accepted offers almost always favor the sellers in today's environment. Because the seller will often become a buyer once their property sells, they are forced to choose not only the offer that provides them with the best chance to make the most money, but also the offer that will close timely with the fewest chances for added compromise. For every day that the sellers' property is tied up in escrow, that's a day that the property is not on the market and a day that delays the sellers' purchase of their next home.
It is common for Buyers to end up viewing several homes before finding something close enough to their liking to put an offer on. Once they find this home, they are often faced with stiff competition. Stiff competition results in winners and losers. The inexperienced buyer is usually the one that has to walk away and find another home suitable enough to make another offer on. It's not uncommon for today's buyer to have to find and make offers on several homes before becoming the successful bidder. With all this time invested, can a buyer really risk entering the market unprepared?
Measure the Strength of your offer from the Sellers' Perspective
Option 1: All cash:
- Cash is attractive because the seller does not have to wait for the buyer to secure a loan or worry about if the buyer can even secure a loan
- A lender will lend up to a percentage of the Appraised Value, where cash offers are not dependent on the appraised value. In multiple bid situations, often times the final offer accepted is over the Appraised Value of the property.; thus, jeopardizing the chances of a buyer who is dependent on securing a loan.
Option 2: A loan with a down-payment of 20% or more:
- The size of the down-payment may offset any slight shortage in value should the appraisal come up short of the proposed offer.
- The buyers have proof that they have been Pre-Approved by a legitimate Lender or Broker. (Savvy real agents representing sellers will almost never consider an offer if there is no Pre-Approval accompanying it. There is too much at stake to risk accepting an offer that may fall apart after two to three weeks in escrow)
Option 3: Buyer with a Pre-Approval from a reputable lender:
- Having a 20% down payment is not practical for most people. There are many attractive loan programs out there for a buyer to choose from that don't require such a large down payment.
- A well prepared buyer can have the loan contingencies removed in as little as 10 days. (Quick turn times closes the gap between offers involving 'option 1' and 'option 2')