Three ways your lender can help you stand out in a tight real estate market
by Sara Ifert
on Friday, February 19th, 2021 at 12:35pm.
At some price points, cash offers and escalating prices have made it more difficult for financed buyers to be competitive - especially if they’re only able to put 3-5% down. But, there are ways buyers can stand out in this situation. One way to appear more competitive in a tight market is through your lender. Dave Grauwels of Guild Mortgage helps many of our clients. He recently chatted with us to share how he and his team help his customers go through the offer process with a competitive edge. Read his top three strategies below.
Dave's Tips for Being Competitive as a Financed Buyer
Get your pre-approval underwritten so your offer is nearly as appealing as cash. If a buyer starts the pre approval process early in their search, we can consider a TBD approval. Let's say a buyer is pre approved for $300,000. We would send it into underwriting as if they had an accepted offer on a $300,000 property. Not a lot of lenders do this because you tie up a lot of underwriting time, but our company has viewed it differently. Having a fully underwritten offer can put a buyer in a more competitive situation. Let's say that you're putting 5% down and somebody else is putting 20% down or even a cash offer. In usual terms, your offer would be less attractive to a seller. But, if your offer is underwritten, I just need the address of the property and an appraisal to move forward. In that situation, your offer is basically as good as cash.
Every property needs a clean title to close - even a cash buyer is not going to close on a title that's not clean. And the appraisal won’t be an issue for a borrower that’s writing over asking if they can make up the shortfall. Now we've put you in a position where your offer is nearly as good as cash.
To do a TBD approval, borrowers sign a couple of documents to allow us to send it right down to underwriting. At that point, it goes in for a full underwrite just as if they were under contract. The buyer who really benefits is the serious buyer that is actively searching. I’ll underwrite them for the full amount they qualify for, because it’s always easy to go back and go down in price on an offer, but not as easy to go up.
Have clear communication between the lender and listing agent. I always follow up on a client’s offer with a call to the listing agent. Communication can really make a difference. Recently an agent I work with was trying to get her sister into a house. It was a competitive situation on a Saturday, so I called the listing agent. The client ended up getting the house! The listing agent later said part of the reason that the offer was accepted was because he's had good success with our company and I had called him on a Saturday. It was just two minutes out of my day, but sometimes it's the little things that make a difference.
We make these calls with regular pre-approvals too, but with a TBD offer I go out of my way to call the listing agent to explain how strong their offer really is. After an offer is accepted, I reach out to the buyer's agent every Tuesday to give them an update until we have the loan commitment. It helps keep everyone up to date on what’s happening and makes it less stressful for everyone. It also builds a strong rapport with both agents. That way if something comes up on their side, they're telling us and we're finding out about it before the eleventh hour.
Proactive communication has been a game changer for us. A lot of loan officers out there are wearing a lot of hats and sometimes communication falls through the cracks, but we’ve really prioritized it and have seen it make a difference.
Be prepared to provide documentation. Sometimes it might seem silly, but any deposit over $500 that isn't your payroll - we have to know the source of that money so we can connect the dots. We’re not trying to be a pain, we just need the information to proceed. When you start to work with us, we give you access to an online portal to upload documents. Once we have all the information we need, we would do a full pre approval review. Then our analysts review all the documents they sent for the pre approval and are able to determine every program the buyer qualifies for. We also let buyers know which loans they don’t qualify for and why. Many buyers have a specific program in mind when they start shopping for a loan, and we help explain why it is or isn't an option for them.
How Guild Mortgage Helps Buyers
We’re set up differently than banks and credit unions because everything we do is focused on mortgages. Our team specializes in what they do. We take the time to educate buyers on their loan options as well as the process. Once the buyer has an accepted offer, we'll call them to go through all the documents together, going through all the loan documents line by line. We want buyers to know all the fees, the rates, the cost, and how we got those numbers.
Over half of the market is first time buyers, so we certainly work with a lot of first time buyers. That’s great, because I really enjoy the education part of it. But with 20 years of experience, I can help all kinds of buyers. If you want jumbo loans, VA loans, FHA loans, USDA, or you want to refinance - you name a program, we do it. We only focus on mortgages, which allows us to do them really, really well. Buying a home can be one of the most stressful times for people. It is rewarding to see someone be able to get into a new home and be very excited about it. It feels great to help make that happen.
Mad City Dream Homes REALTOR Alan Feder raves about Dave’s work and frequently recommends him to clients. “Dave has a great team that takes clients through a very user-friendly process. The TBD offers are a great way to stand out in this competitive climate,” said Alan.
Dave Grauwels: Producing Branch Manager, NMLS# 287330 17 Applegate Ct., Suite 100, Madison, WI 53713 E: email@example.com P: (608) 234-5118 Dave is licensed to do business in the state of Wisconsin. Guild Mortgage Company is an Equal Housing Lender; Company NMLS 3274. Guild Mortgage is not affiliated with Mad City Dream Homes at RE/MAX Preferred.