In the ever-evolving landscape of real estate, the current market demands a strategic approach from both buyers and sellers alike. With multiple offers becoming a recurring theme, navigating the intricacies of financing and property valuation requires careful consideration and expert guidance. Here are some key insights and advice for clients to navigate this dynamic market with confidence:
1. Get Pre-Approved Well in Advance:
In the quest to secure financing and make firm offers, timing is key. Pre-approval is a crucial step in the process, but it requires thorough attention to detail. While same-day turnarounds are possible, the complexity of the application may necessitate a few days’ wait. Planning ahead is essential – whether it’s weeks, months, or even a year in advance. Emphasize to clients the importance of early pre-approval, highlighting its cost-free nature as a rare gem in the realm of real estate.
2. Increased Inventory:
With the arrival of spring, many homeowners choose to list their properties, leading to a surge in inventory. This abundance of options gives buyers a wider selection to choose from, increasing their chances of finding the perfect home. Sellers also benefit from increased demand, as more buyers enter the market in search of their dream home.
2A. Appraisal:
While pre-approval covers aspects like credit and income, property appraisal remains a wildcard. Properties aren’t appraised until after an offer is accepted, often falling outside the financing condition period. This delay underscores the need for due diligence in property selection. Look out for potential red flags like knob and tube wiring, foundation cracks, or mold, which may impact the appraisal process.
2B. What to Do if Your Appraisal Comes in Light:
An appraisal coming in below the purchase price can be disconcerting, but it’s not cause for alarm. Review the report for inaccuracies and consider switching lenders for a fresh appraisal. Different appraisers may offer vastly different valuations, especially in competitive markets with numerous offers. The size of the down payment can also influence the impact of a light appraisal – a point worth exploring further with a trusted mortgage professional.
2C. Take Control of Your Appraisal:
Addressing appraisal concerns preemptively is key to avoiding client panic. Working closely with a trusted mortgage professional can facilitate resolution before issues escalate. Consider the case of a client facing a substantial appraisal discrepancy: collaboration between the mortgage professional and realtor led to a seamless resolution, sparing the client undue stress. The disparity between appraisals underscores the subjective nature of property valuation, a factor to bear in mind in competitive markets.
3. Know The Numbers:
Transparency and clarity are paramount when clients assert readiness to make firm offers. Ensure they understand the variables at play in their pre-approval, such as property type, taxes, and maintenance fees. Generic pre-approval letters may lack this specificity, leaving clients in the dark. Detailed pre-approval emails, complete with specific calculations, empower clients to make informed decisions tailored to their unique circumstances. Recognize the distinction between pre-approval for different property types, as condo fees can significantly impact affordability.
In closing, while the allure of waiving the financing condition may be tempting, it’s essential to prioritize client protection. A measured approach, guided by expert advice and diligent preparation, ensures clients can navigate multiple offer situations with confidence. While the road may be fraught with challenges, it’s through collaboration and informed decision-making that success in the real estate market is achieved.
The above information is provided by Andre Persaud, Mortgage Agent, Lic. #M14000772 / SAFEBRIDGE Financial Group /
Broker License #10524.