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Peter Benjamin
Written by:
Peter Benjamin, CMB®
Senior Vice President, Mortgage Lending
NMLS #408105
Office: 240-292-5361 | pbenjamin@lfcu.org

Preparing and making a winning offer on the home of your dreams is an especially relevant topic in today’s real estate market. Buyers everywhere, especially in high-demand markets like the one we’re experiencing in the DC metro area, want to know how to make their home offers stand out so that the seller ultimately selects their offer over others. We’ve got you covered.

In our recent live video session "Making and Preparing an Offer”, I interviewed one of the top local realtors in the DC area, Kelly AdreaOpens in New Window, who is also a member of Lafayette Federal’s HomeAdvantage® programOpens in New Window. Kelly is well-versed in just about every aspect of real estate and is known for her abilities to help buyers find a home they love, even in white-hot markets like the one we’re experiencing now. See what she has to say below.


Get a Preapproval Letter

Every homebuying journey has to start somewhere. In a market like today’s, your homebuying journey should start with a pre-approval letter. According to Kelly, most real estate agents begin working with a potential homebuyer only after they have obtained a preapproval.

A preapproval is a loan commitment from a lender that states the maximum loan amount you can be approved for. Your maximum amount is based on various documents you submit to the lender, including your credit, your income, your debt-to-income ratio, and more.

A realtor needs your pre-approval letter so they can begin creating your home search strategy. They’ll start looking at homes and areas that are within your price range. And they’ll be able to recommend whether the things you’re looking for in a home are likely to fall within your budget.

Your pre-approval letter is also important for sellers to see that you’re a serious, qualified buyer when you begin looking at homes. Without a pre-approval letter, sellers may not even glance at the offer you’re submitting.

So if you’re thinking about buying a home and don’t have a pre-approval letter yet, start that process by contacting Lafayette Federal Credit UnionOpens in New Window today!

Work With a Real Estate Agent That You Trust

Kelly’s next piece of advice is to work with a real estate agent you trust. Sure, you have the power to look at home listings yourself through popular real estate websites, but a good agent who is an expert in the homebuying process and your local market will save you time and frustration.

In fact, Kelly mentions that realtors typically have exclusive access to home listings before they are posted to popular real estate websites. With a good realtor on your side who knows your budget and the type of home you’re looking for, you’ll be the first to know about new home listings as they come on the market.

However, real estate agents provide much more than early access to home listings. They are also licensed to help buyers navigate the legal and regulatory requirements that are a part of the homebuying process. These regulations can change from state to state or even county to county, so it’s invaluable to have an expert on your side. Among other things, your realtor will help you draft any offers you make to ensure you’re protected and regulations are followed.

Additionally, agents have the access you need to be able to get into the properties for showings. It’s essential to work with a real estate agent who is available at the right times for you to view homes. Likewise, you want to make sure your realtor (or someone on their team) will be available to take your calls, especially in a market like today’s, where some homes are selling within 24 to 72 hours after they’ve been listed.

You may be spending a lot of time with your real estate agent, so Kelly recommends interviewing a few agents to find one you trust and want to work with. She even provides a list of questions every buyer can use when interviewing real estate agents:

  • Are you a full-time agent?
  • Do you work with buyers or sellers?
  • How much experience do you have in real estate? How much business have you done?
  • How much experience do you have in the areas I’m looking for a home?
  • When do you have time to show homes to clients?
  • When are you available by phone to answer my questions?
  • Do you work with a team who can answer my questions when you’re not available?

And typically, the seller pays the fees for both the listing agent and the buyer’s agent. So if you’re a first-time homebuyer, you won’t even have to pay your realtor’s fee. There’s absolutely no reason not to work with a great realtor when you’re a first-time homebuyer!

Offer the Right Amount for This Market

Offering the right amount depends on what type of market we’re in. In a seller’s market, the listing price is typically the starting bid. Kelly notes that listing agents strategically set a listing price that is most likely to garner the highest amount of offers in this market. This means that the listing price is usually not the price the seller expects to actually sell their home for.

Of course, the price isn’t the only factor sellers consider when reviewing your offer. As stated above, they will also look to see if you have a pre-approval letter that qualifies you to offer the amount you’ve submitted.

Sellers may also look at the amount of earnest money you put down. Earnest money is the amount the buyer puts down as a security deposit on the contract. This money goes into an escrow account; the seller won’t receive it before closing. And earnest money isn’t extra – it can be used toward your down payment or closing costs when you close on the home. Essentially, your earnest money communicates how serious of a buyer you are to the seller.

You might also "sweeten” your offer with something called an escalation clause. An escalation clause is an addendum added to the contract that states you will be willing to raise your bid up to a certain amount depending on a particular circumstance. For example, imagine you offer $200,000 on a home. If there are multiple offers, you might add an escalation clause stating that if another buyer offers more, you will pay $1,000 more than that offer up to a specified amount.

Ultimately, there are several ways to make your offer more attractive to sellers. Of course, offering the right price is critical in today’s market. But Kelly reminds us that your real estate agent can help you strategize other ways to sweeten your offer that work within your budget, such as increasing your earnest money deposit or adding escalation clauses.

Use (or Don't Use) Contingencies Strategically

Contingencies in real estate mean that an offer has been made and accepted, but the sale is dependent on some circumstance or circumstances happening before the deal is finalized. For example, four common contingencies in real estate include:

  • A successful home inspection
  • An appraisal
  • Financing
  • The buyer’s need to sell an existing home they own

The fewer contingencies you have in a seller’s market, the more appealing this is to a seller. This is why many buyers in this market are waiving the home inspection contingency. Some buyers are willing to purchase a home as-is and eat the cost of any necessary repairs that may be hiding out of sight.

Kelly states that contingency strategies are yet another reason why buyers need an experienced real estate agent on their side. A realtor can help buyers determine whether or not contingencies are reasonable in a particular area or on a certain type of property. Condominiums, for example, are currently not as high in demand as single-family homes, so sellers of condominium properties may be more willing to work with contingencies.

Accommodate the Seller's Needs When Possible

Finally, Kelly advises that buyers who win the offer in this market are accommodating of sellers’ needs. She says the most common need sellers have today is called a rent-back, which means the seller is allowed to live in the home after closing up to a specific date, sometimes for 30 days or more. The seller pays rent to the buyer during this time, who now owns the property.

The reason for a rent-back is that sellers are also typically buyers in today’s market. They too are dealing with the competitiveness that is characteristic of this market and may need extra time to find their next home. Buyers who can accommodate this need are more likely to win a contract when competing with other buyers who are less flexible.

Start Your Journey with Lafayette Federal

If you’re just getting started on the homebuying process, remember that you’ll first need a pre-approval letter in hand. Lafayette FederalOpens in New Window is here to help. Once you provide us with the information and documents we need, we can typically have your pre-approval letter in your hands within 24 hours, which is a huge advantage in today’s fast-paced real estate environment.

As a member-focused and service-driven partner in our community, we offer a variety of resources and services to help our members complete the homebuying journey with ease and submit winning offers. In addition to pre-approval letters, we also provide our members with:

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