What Is A Backup Offer?

When you find a home you love, you most likely will want to take the steps you can to buy it. When a home is already under contract, there’s actually a little-known strategy that can be used to help you have a chance at getting the property. 

When you make a backup offer, you’re doing all of the same things you’d do under normal circumstances. The only difference between a normal offer and a backup offer is that you’re not guaranteed to get the home. The first deal needs to fall through in order for you to have a shot.

Advantages To Backup Offers

The backup offer is a bit of a stretch, but it still does give you a little bit of a chance to get a home. When a backup offer is in place, the home won’t just go back on the market if something falls through. This is especially smart when it comes to lower inventory markets. When a home is re-listed, you’ll need to compete against other buyers. If a bidding war is initiated, the home’s price will keep going up. The backup offer being in place helps the seller to feel secure in the sale of their home one way or another. If for any reason the first buyer falls through, you’ll be able to swoop in and get the home yourself.

Timing Is Everything

Keep in mind that there’s a certain period of time before a deal needs to be closed on for a home. The original buyer will need to close the deal on the home in an average of 50 days. Knowing the time frame that you’ll need to wait around for a decision is helpful for you in your own search for a home.

You can also have your agent check in with the listing agent for the property on a frequent basis. This lets the agent ad seller know that you have a keen interest in the property in case there are any difficulties coming from the other side of the deal. 

If The First Deal Doesn’t Go Through

If the first deal on a home does fall through, you’re not the new owner of the home just yet. There’s always a possibility that the first buyers found some very difficult problems with the home during the inspection. These could be big issues like an issue with the roof or the foundation of the home. Be sure to include a home inspection contingency with your contract so that you can have your own inspection conducted. This way, you’ll know if there are any problems with the home and that you will be able to deal with them.

A backup offer can be a great tool to use in tight markets to help you get a home that you love. It’s always a good idea to proceed with caution in any home deal to make a sound financial decision.

How To Prepare To Close On A Property

Once you have gone through the pre-approval process and have narrowed down your home search, there’s a good chance you’ll soon find a place that you want to make an offer on. This can seem like a huge step for any first time homebuyer. Even seasoned home buyers feel butterflies when the time comes to make an offer on a home they love. Before you even start your home search, you should become educated on how to make a good offer in order to land the property that you really want. There’s so many factors that effect your offer including the surrounding properties and the current state of the market. Here are a few very important pieces of advice that you should heed in order to have a successful time securing a home and closing the deal. 

Craft A Persuasive Offer

In many areas there’s a low inventory of homes and a high number of those seeking to buy. This means that you’re not guaranteed to get a property that you have made an offer on. Lowball offers might not be at all competitive and even insulting to sellers in certain markets. Often, you may need to make an offer of more than the asking price if you’re in love with a home. By working with your real estate agent and doing the right research, you can craft an offer on a home that will be compelling for sellers.    

Decide On Your Contingencies 

Once an offer has been accepted, it’s time to get to work on those contingencies. Be especially mindful of financing contingencies. If something falls through in the process, you’ll want to be sure you can get the deposit you made back. Also keep in mind that sellers love reliable buyers who have already been preapproved.  

Home inspection contingencies are another area of importance. After you sign the purchase agreement and the inspection is complete, you’re allowed to ask the seller to make repairs or provide you with a counter offer. While this can be one of the more nerve-wracking aspects of home buying, it has many positives. Home inspections protect buyers from purchasing a home that they can’t live with in cases of extreme mold, termites and other environmental and structural issues. 

The appraisal contingency is also important. In order for you to qualify for a loan, the property must be appraised. The property must be valued at or above the purchase price. A loan will only be approved by a lender up to the appraised value. If your home loan is $400,000 but your home of choice is appraised at $390,000, you’ll have a problem.       

Your Finances Matter Until You Get To The Closing Table

Don’t go crazy with all kinds of purchases before you reach the closing table. Opening a new credit account at your favorite furniture store, for example, could lead to a disastrous surprise on closing day. Hold off on big purchases until after you secure your home. Also avoid making large transfers or deposits from your bank account. don’t do anything to negatively affect your credit score

  

Know What To Bring To The Closing

Don’t show up to the closing for your home purchase unprepared. You’ll need to have the following items: 

  • Photo ID
  • Checkbook
  • Cosigners 

Think Ahead

Be sure that you think of the future when you’re purchasing your home. You’ll need to have enough cash flow to pay for things like property taxes, home insurance, utility bills and even new furniture for your home. Plan your future mortgage payments accordingly. Some companies have payments that are monthly or bimonthly. 

While buying a home is a huge undertaking, with the right plans in place, the process will be as seamless as possible. With the right plans, the moving truck will be pulling into the driveway before you know it.      

Establish a Realistic Asking Price for Your Home

Many home sellers face a dilemma. In most instances, it is important to set a competitive price for your property to stir up plenty of interest in it. Conversely, it is essential to explore ways to maximize the value of your residence.

For home sellers, establishing the right price for your house is key. By doing so, you can set a price for your home that meets your needs as well as homebuyers’.

What does it take to establish the right price for your residence? Here are three tips to ensure home sellers are equipped to do just that.

1. Study the Housing Market Closely

The housing market fluctuates constantly. As such, what your home was worth yesterday may not be what it is worth today.

If you study the housing market closely, you can price your residence based on the current real estate sector’s conditions. Thus, you’ll be better equipped than other home sellers to garner attention from homebuyers and accelerate the home selling process.

Examine the prices of comparable houses in your area, along with the prices of recently sold houses similar to your own. This will make it easy for you to establish “fair market value” for your property and price it accordingly.

Also, don’t forget to conduct a home appraisal before you add your home to the real estate market. With a home appraisal, you’ll be able to receive comprehensive insights into your home’s condition and complete home repairs to boost its value.

2. Set Home Selling Goals

Do you want to sell your house as quickly as possible? Or are you looking to optimize the value of your home, regardless of how long it remains on the real estate market?

Set home selling goals prior to adding your house to the real estate market, and you can establish a fair price for your residence.

For example, if you want to sell your house so you can relocate quickly, you may want to price your residence competitively. On the other hand, if you can afford to be patient, you can always wait out a buyer’s market to maximize the value of your residence.

3. Hire an Experienced Real Estate Agent

Your real estate agent will play a key role in your ability to sell your house and get the best price for it. And if you employ an experienced real estate agent, you should have no trouble accomplishing your home selling goals.

With an experienced real estate agent at your disposal, you can receive extensive support throughout the home selling process. This real estate professional will offer expert tips and advice to help you get your property ready for the real estate market. In addition, he or she can offer guidance about how to price your home competitively, whether to accept or reject a homebuyer’s offer and more.

Collaborate with an experienced real estate agent, and ultimately, you can simplify the process of selling your home.

How to Choose the Right Mortgage Option

Buying a home represents a dream come true for many individuals. However, to transform this dream into a reality, you’ll likely need to qualify for a mortgage.

Finding the right mortgage may seem difficult, particularly for a first-time homebuyer. Fortunately, we’re here to help you make sense of all of the mortgage options at your disposal so you can select the right option based on your budget and lifestyle.

Here’s a closer look at three of the most common mortgage options for homebuyers.

1. Fixed-Rate

With a fixed-rate mortgage, there are no cost fluctuations. This means that you’ll pay the same amount each month for the duration of your mortgage, regardless of economic conditions.

For example, if you sign up for a 15- or 30-year fixed-rate mortgage, you’ll wind up paying the same amount each month until your mortgage is paid in full. In some instances, you may even be able to pay off your mortgage early without penalties.

A fixed-rate mortgage often serves as a great option for those who don’t want to worry about mortgage bills that may fluctuate over the years. Instead, this type of mortgage guarantees that you’ll be able to pay a consistent monthly amount for the life of your loan.

2. Adjustable-Rate

An adjustable-rate mortgage represents the exact opposite of its fixed-rate counterpart. The costs associated with this type of mortgage will change over time, which means you may wind up paying a fixed interest rate for the first few years of your loan and watch this rate go up a few years later.

For instance, a 5/1 adjustable-rate mortgage means that your interest rate is locked in for the first five years of your loan. After this period, the interest rate will adjust annually. Therefore, a rising interest rate may force you to allocate additional funds to cover your mortgage costs in the future.

An adjustable-rate mortgage may prove to be a viable option if you plan to live in a home for only a short amount of time. Or, if you’re a college student or young professional, an adjustable-rate mortgage may help you pay less for a home now, secure your dream job and become financially stable by the time your initial interest rate period ends.

3. VA Loans

The U.S. Department of Veterans Affairs (VA) provides loans to military service members and their families. These loans are backed by the government and enable individuals to receive complete financing for a house. Thus, with a VA loan, an individual is not required to make a down payment on a house.

If you ever have concerns or questions about mortgage loans, banks and credit unions are available to help. Also, your real estate agent may be able to offer mortgage insights and tips to ensure you can secure a mortgage quickly and effortlessly.

Learn about all of the mortgage options that are available, and by doing so, you can move one step closer to buying a home that matches your budget and lifestyle.