Be prepared to Overcommunicate!
From Low Inventory to Multiple Offer scenarios , the real estate market—and daily life—has been completely upended in just a few weeks.
Yet maybe in spite of it all, you’ve managed to find a home you love and are ready to make an offer.
Congratulations! But as you hover on the brink of what is potentially the biggest investment of your life, amid a global crisis, you may be feeling a fair amount of uncertainty.
Ensure you have a mortgage commitment
Securing financing may be the biggest challenge right now, so make sure you have a mortgage commitment letter when you make an offer. This is a more detailed document than a pre-approval and, as the name implies, represents a firm commitment from your lender.
“Banks are issuing fewer loans in order to conserve cash to offset the imminent delinquencies,” says John Castle, an agent with Keller Williams Integrity Realty in Ottawa, Ontario. “Many buyers believe they have secured financing when, in reality, their lender may have only conditionally approved their loan.”
And many lenders are tightening up their terms and conditions. Minimum credit scores and required cash reserves have risen to new levels, making it difficult for many buyers to qualify.
Make sure your lender is staying on top of the fast-changing mortgage industry and accomodate such options like remote Mortgage Applications and remote signing.
“But as long as the buyer can qualify for whatever financing they are seeking to acquire, there shouldn’t be any issue with achieving a successful close,” Claire says.
Just don’t be afraid to over-communicate during this time.
“Make sure you touch base with your lender preferably every day, or at least every other day,” says Liu. “The credit markets are shifting rapidly.”
And if you have the funds, all-cash offers are even more desirable to sellers during this time, as they allow buyers to close on the home more quickly than an offer contingent on financing.
Be prepared for a longer closing
Ordinarily, once your offer is accepted, it’s a straight line to closing. In the age of coronavirus, that journey is more of a zigzag. That means buyers need to prepare for potential delays.
This is due to the health and safety concerns of appraisers, home inspectors, and repair contractors. They are adjusting their guidelines and availability, which can slow the transaction. (Many of these professionals are quickly adapting to doing their work remotely when possible.)
“Buyers may need to embrace a longer transaction process by setting the closing date out further than the typical 30 days,” advises Bauer.
She also recommends adding contingencies in the contract for the in-person viewing of the property.
“By anticipating a potential delay upfront and writing an extension into the contract, buyers can have a little more peace of mind in this uncertain time,” she says.
CRAFTING AN IRRESISTIBLE OFFER