June 2021

A Guaranteed Mortgage Pre Approval. The Secret To Winning A Real Estate Bidding War?

A  Guaranteed  Mortgage Pre Approval.  The Secret To Winning A Real Estate Bidding War?

The Secret To Winning A Real Estate Bidding War? A $2,000 Mortgage Pre Approval Guarantee

HED ALTERNATIVES: The Two Letters You Should Get To Win A Real Estate Bidding War

A Mortgage Pre Approval With A Cash Guarantee Could Be The Secret To Winning A Bidding War

Over the past year, mortgage rates hit historic lows allowing first-time buyers to have more buying power. Not surprisingly, that–along with a mass exodus from cities and remote work–sparked a ton of demand. But, with a limited inventory, the real estate world quickly became a seller’s market. And that means bidding wars. 

Yes, even if you’ve found your dream home and have all your finances in order, other buyers are swooping in with all-cash offers way over the asking price. So, how do you ensure victory? There are a few strategies you can use, including a mortgage pre approval guarantee.

Get A Mortgage Pre-Approval Letter With A Cash Guarantee

Most people know to get a mortgage pre qualified for a mortgage amount when home shopping. Cunning home buyers will even get a mortgage pre approval. But, when you’re in a market with a ton of wise shoppers, that mortgage pre approval will need to stand out among other offers. How? Well, Get A Rate offers a guaranteed fully-verified mortgage pre approval with a $2,000 guarantee. With this unique mortgage pre approval letter, real estate agents and (more importantly) sellers know that you can genuinely afford the mortgage amount. Get A Rate is so confident in securing a final commitment letter that they will pay both the buyer and the seller $1,000 each if in the rare case it falls through. So, all parties have confidence the deal will go through or get compensated if it doesn’t. Try asking your current lender if they can guarantee their approval and see what they say. That’s a win-win in a bidding war. 

Let’s face it; real estate agents know that a decent percentage of mortgage pre approvals are not approved correctly or, even worse, are not real. Unfortunately, most mortgage companies do not spend time pre-underwriting a mortgage pre approval request because it’s just to expense or don’t have in-house underwriting. Unfortunately, most homebuyers have to depend on Loan Officers to review their applications and issue out mortgage pre approval letters. In a buyer’s market, lousy mortgage pre approval might get accepted. In a seller’s market, the sellers have multiple options and will choose to work with buyers backed by reputable mortgage lenders that specialize in the purchase market.    

Write A Personal Letter

Having a mortgage pre approval letter with a cash guarantee will take care of the practical financial matter of purchasing a home. Writing a personal letter will cover the emotional side of the process. You want to build a connection with the seller to stand out among the other offers. Explain how you see raising a family in that home, why it’s important to live close to family, or what you love architecturally about the house. Sellers want their homes to go to someone who wants to create memories the way that they did. It helps you to be seen as more than just a number on paper. It also allows you to write about the reasons behind your offering and highlight the mortgage pre approval with a guarantee. Remind them how you went above and beyond to be financially viable.

Remove Some Contingencies

A mortgage pre approval letter and a personal letter are two key ways to win a home buying war. But if your real estate agent thinks all-cash offers or over-asking offers are still luring the sellers, you could remove some contingencies. While it can be risky, you could remove an appraisal contingency, for example. This would speed up the closing process, which is something alluring to sellers looking to move fast. Instead, you could find out what the value of the property should be by ordering AVM Automated Appraisal Model. Get A Rate orders AVMs for clients for free, so a buyer feels comfortable with their options. Even if the value comes in short, the buyer would know the lowest value point the home can come in at and be prepared for the difference in payment. A buyer could then change the percentage of the down payment amount and apply a portion towards the difference in value. It’s important to know that a lender will always use the lower number from the purchase price or appraised value of a home.   

Again, it can get tricky when the down payment is 20% and the client is not paying for PMI. If the value drops and the down payment goes under 20%, then the borrower could end up paying extra in mortgage insurance. But with a $2,000 mortgage pre approval guarantee and personal letter in conjunction with a contingency waiver would make you a worthy opponent in any bidding war. 

Use An Escalation Clause

In this market, you’re almost guaranteed to face multiple offers on a home. One way to combat that and intrigue some sellers is by adding an escalation clause to your offer. Basically, that means you state that you’re willing to pay a specific price for a home. But if the seller receives another higher offer, you are willing to increase your offer incrementally to beat out those offers up to a maximum amount. Some sellers like this method because it encourages potential buyers to outbid each other upfront. It also prevents a lot of back and forth with multiple offers and can streamline the process.

Set An Appraisal Floor

While waiving the appraisal contingency is an option, it comes with a lot of risks. Instead, you could set a contractual appraisal floor below. In this case, you would state the lowest appraisal price below the sales price that you’re willing to accept. The seller would be protected from having to lower the home prices or have a buyer back out entirely in the event of a low appraisal.

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