How can a lender impact your chances of winning a bid?
There are many ways to impact your chances of a winning offer, but how exactly does having the right lender help?
It’s go time: 2 pm on a Monday afternoon and you’re staring down the barrel of a 5 pm offer deadline for a property you’d really, really, really, like to buy! Since before you even visited the property at an open house over the weekend, you’ve been in constant communication with your agent spit-balling offer strategies. You’ve put your best number on the table, you’ve upped your earnest deposit from 5% to 10%, you’ve incorporated a very hefty aggregate waiver into your inspection contingency (or you’ve removed your inspection contingency all together!). You’ve offered the sellers a “use & occupancy” following your closing date to help with their transition. What else can be done? That’s where a good lender can possibly get you over the finish the line.
Here are 5 ways the right lender can make a big difference:
Reputation. The lender has a great reputation and is known by the listing agent. A couple of the lenders we regularly recommend are very well known in the industry. If a listing agent knows that our client is working with that lender, it inspires some confidence. If we’re up against a similar offer with an unknown lender, that listing agent may favor our offer.
Dates and times. Aside from closing date, if you’re including a financing contingency with your offer, you’ll also be incorporating a “commitment date” contingency. This is important to sellers because it’s the date after which the mortgage contingency (and any uncertainty that comes with it) goes away! Some lenders aren’t able to work as quickly as others and thus can’t necessarily offer a faster commitment date. Maybe the seller wants a very quick closing or an extended closing. Not every lender can close in under 30 days or extend a rate lock beyond 60 days (at no cost) for an extended close.
Price. If you have a lender with many tools at their disposal, you may find that, as you’re crunching numbers and trying to stretch yourself into a big purchase price, a really good (and creative) lender can find some solutions to get you a little more ammunition in the way of more dollars on the table or a bigger down payment that may be more attractive to some sellers. They may also have creative solutions in the face of a deficient appraisal. Let’s face it, in a rising housing market most often the biggest fear over financing is whether a home will appraise. A creative lender (and agent) can assuage those concerns.
Being proactive/responsive. When we’re listing a property and we’re trying to vet a multitude of offers, we will often call the lender to talk through some of the terms their buyer has offered and as well to get a sense of how they operate. When do they call in the appraisal? How would they handle a deficient appraisal? And even more, there are a few lenders who will actually proactively call the listing agents personally. If you’re a listing agent it can be pretty compelling when a lender reaches out to you with a personal call to discuss the strengths of their client and offer clarity on their process.
Offering a precommitment. Some lenders have the means to underwrite the loan BEFORE you’ve even identified the home they want to bid on. The only condition, at that point, would be an appraisal which, if you’ve also found a solution for a deficient appraisal, is as close to a “cash offer” as you can have.
Obviously, we will happily recommend to you a lender we love and trust who is also aligns with your goals (whatever those may be!). But if you’re just getting started here are 3 tips to keep in mind as you assemble the lending piece of your homebuying team:
Don’t focus on rates. Sure, rates are important but there are other costs, upfront or amortized, that will impact your wallet and well-being! Make sure you’re getting a clear sense of what your costs are, on the whole, from the closing table through the end of your amortization schedule. Many lenders can be competitive with their rates, but they can’t necessarily be competitive everywhere it counts like responsiveness, available programs, industry knowledge, etc.
Responsiveness is KEY. I can’t stress enough that a responsive lender is so important. Will they or someone from their team pick up the phone when it’s go time? Even when “go time” is 8 pm on a Sunday evening? If not, find someone who will. Often a good lender has a small army of team members who are available to address your concerns or questions 7 days a week and after business hours. If you find your dream property at 3 pm on a Sunday and need to make an offer by 7 pm that evening, it’s immensely helpful to have someone from your lender’s team to talk through some scenarios.
Ask around. Do look at reviews or ask your agent for their insight on a lenders efficacy and capabilities. We all have some experience with lenders who are/were incredibly responsive and effective, and we ALL have nightmare stories to tell too. But definitely utilize your network to build out the rest of your team. Speaking from experience, when our buyer clients are working with lenders and attorneys we love and trust, things almost invariably go more smoothly!
The main takeaway is to remember that when you’re buying a home it’s best to have your team assembled from the onset. A lot of folks start looking before they’ve put a solid team and game plan together and then wind up feeling undue pressure, making mistakes, or getting into a situation where, if they’d had a solid team in place, they would have won the deal.
