5 Ways to Gain an Edge in a Competitive Homebuying Market

Demand for real estate is growing in many markets across the country. That’s great, but it creates competition in the form of all-cash offers, offers for thousands of dollars over list price, and a growing gap between affordability and prices in a given area. This dynamic only adds to the frustrations many buyers face in the market. If you are a part of the majority who are buying a home with financing, these following tips can help you solidify the deal.

Note that price is certainly a factor — if not the factor — most sellers are concerned about. However, while price is crucial, there are other factors that can give you an advantage when you’re trying to secure an initial commitment from the seller.

1. Get the Right Lender. Gone are the days when you could simply get pre-approved to buy a home, use that pre-approval letter to make offers and expect to get into contract quickly. Your loan officer’s reputation in the community is critical, especially among the agents who are controlling the deals. If your loan officer has a trusted name, recognition and a favorable presence in the local market, this can be communicated via the listing agent, who has a direct influence on what offer the seller takes.

2. Get the Right Buyer’s Agent. You’ll need a real estate agent to represent you if you’re going to be making offers on properties listed on the open market, and picking an agent to represent you in your house hunt can be no easy feat. Getting personal recommendations from family or friends is a great start. Another possibility is to explore review sites and pick an agent who has experience and has open-ended honest reviews by other consumers. Ideally, the person you’re going to want representing you is someone who has a reputation for delivering in the local market. This is especially important as many real estate agents network with each other and work with each other on a regular basis. If your buyer’s agent has a favorable reputation not only in the local community, but with the listing agent in a previous transaction, for example, this is a very good sign that person can influence the seller because they know the offer is strong and they trust the other side.

3. Get an Introduction to the Listing Agent. Upon your buyer’s agent (who’s representing you) offer submission, your loan officer calls the listing agent to introduce themselves and explain how well-qualified you are to purchase that property. There is tremendous opportunity to create a relationship from the financing side in further supporting a strong offer. Many listing agents inevitably call the lenders of the buyers whose offers are strong on paper in an attempt to feel them out about the buyer’s qualifications. Preemptively, taking this step is a favorable approach that makes it easier for the listing agent to influence the seller to accept your offer.

4. Understand How You Appear on Paper. It doesn’t matter if you have $500,000 in income; if you’re buying a home and putting less than 20 percent down, even if another offer is higher than yours, the offer with 20 percent down still looks stronger on paper to agents. The old 20 percent down approach is still king. Granted, you can still buy a house with as little as 3.5 percent down on an FHA Loan, and if your offer is higher, that can help offset the perceived lower financial strength indicative of a less than 20 percent down offer.