Hi there! ¬†It’s a few days past Ask Meredith Mondays – the fall cold slowed me down just enough to make this Wednesday, and there’s no video because the voice isn’t there either!
I wanted to address a changing tide and something that is a sticking point between Realtors, a legal contract, Mortgage Lenders and the new TRID rules that have gone into effect. ¬† What a homebuyer needs to make an offer on a new home has always been fairly standard and commonplace: a letter from a lender of pre-approval to purchase, a check of earnest money for an escrow account and a written contract of offer to a seller. ¬† ¬†Some things have changed this tide in my world in just the past few days.
First, we have the market. ¬†Homes are selling, if they’re priced right, at a decent clip in the Richmond and Charlottesville, Va markets where I work. ¬†This means that at the lower price points, the competition to get to see a home and then make an offer can be fairly high pressure for a buyer who may be ¬†inexperienced. ¬† Often, the buyer gets excited by what comes online and wants to see it right away. ¬†The rush to see and decide on homes causes a large step in the process to go un-researched, especially if the buyer is not working with an educated Realtor at the time they decide to go buy a home. ¬† In the haste, they select an agent, call a loan officer to at least get the process started and in some cases, write offers on homes without presenting a seller a letter of pre-qualifcation or pre-approval with their offer to purchase.
This can be a double edged sword: ¬†the purchase agreement in Virginia has a spot to fill in the type of financing obtained – if any, to protect the buyer and inform the seller of how they will get funds to buy the home. ¬†However, there is also a clause in the agreement that allows a buyer a certain amount of time AFTER the agreement is signed to make due diligence to obtain financing. ¬†The sellers and the agents representing the sellers, would like to see how the home will be financed AT THE TIME the offer is made, for many reasons. ¬† For this reason, the typical course is to provide a lender letter at the time the offer is made.
However, because the haste of the fall market, as well as some of the new TRID lending rules that are now in place – called Know Before You Owe, lenders are not always kicking out these letters as fast as needed, or able to work quickly with buyers to fully prepare documentation, or buyers think because they’ve bought and sold numerous times ‘they’re golden’. ¬† These are not always the case. ¬† The best insurance to making sure that your offer would be one hundred percent solid when presenting with a seller and the most competitive, is to spend the extra days needed to work with a lender of choice and have solid documents in place.
So the lesson today is, if you’re thinking of taking advantage of the great winter prices, please stay off the internet for just a few more days before you start your home search. ¬†Call a trusted friend for a referral to a Realtor¬† who has a good network of lenders, that can guide you and also do the homework to make sure you have what you need, before you leap! ¬† There is no cost associated with shopping lenders, or commitment at the time a letter is written, which is often a misconception. ¬† Please get preapproved or prequalified. ¬† The sellers who you’re making your offers to will thank you, and so will their Realtors. ¬†Your offer will be first in line, when you’ve been first in line putting your ducks in a row.