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“Will I get
a second chance?
Will the seller
counter my offer?”
1. Submit your highest and best offer as soon as possible. I am often asked, “Will I get a second chance or will the seller counter my offer?” Probably not, the Seller will likely negotiate with the best offer and reject all others. So, if you really want the home, submit your best offer up front.
2. Keep your offer clean and simple. If you don’t need closing costs paid by seller then don’t include that in your offer. Don’t ask for personal property. You can always ask for small things later, and wait for the home inspection to ask for repairs. Pay for the home warranty yourself; they are inexpensive (typically under $500) and not worth losing the house.
3. Have your agent call the Seller’s agent to ask why they are selling. Price may not be the priority; it may be speed, flexibility or a certain closing date. Unless you ask, you won’t know what the seller will consider the most acceptable offer.
4. If you are able, submit the offer not subject to it appraising. This is a volatile market and appraisals are subjective, not scientific. Without this, there is a better chance the deal won’t fall out and the seller won’t have to worry about negotiating the purchase price later. However if you plan to finance, make sure you can pay the difference of the appraised value and what you agreed to pay for the home, since your lender will only give you a loan up to the appraised amount.
5. Write a personal letter to the seller, unless the property is bank or business owned. Tell the seller why you want the home and how you will enjoy certain features.
6. Submit complete paperwork. This includes the contract, pre-approval letter and earnest money check. If possible, include a preapproval letter from a reputable lender with the property address on it. A certified check is better than a personal check for the Earnest Money Deposit, and it should be higher than the standard for your area. This shows good faith and your commitment to buy the property.
7. Your offer should be higher than the list price. It should be as much as you think the home is worth plus a few dollars. Or you can offer to pay $1,000 more than the highest offer up to a certain amount. Interest rates are low right now so this additional amount over 30 years won’t amount to much.
Use these strategies to put your best foot forward.
The Federal Housing Administration (FHA) announced this week that it will be raising its annual mortgage insurance premium (MIP) by a quarter of a percentage point on all 30- and 15-year loans. This increase comes as part of a new premium structure for FHA-insured mortgage loans the FHA is putting in place in response to the Obama administration’s housing finance reforms. The new structure will apply to all new loans insured by the FHA on or after April 18, 2011. Existing and reverse mortgage (HECM) loans insured by FHA are not impacted by the pricing change.
The following is an excerpt from a DSNews article reported on Februay 15, 2011:
“FHA Commissioner David Stevens says the annual payment adjustment will increase borrowers’ costs about $30 per month and will help to strengthen the agency’s depleted coffers.
‘After careful consideration and analysis, we determined it was necessary to increase the annual mortgage insurance premium at this time in order to bolster the FHA’s capital reserves and help private capital return to the housing market,’ Stevens said in a statement.
He continued, ‘This quarter point increase in the annual MIP is a responsible step towards meeting the congressionally mandated two percent reserve threshold, while allowing FHA to remain the most cost effective mortgage insurance option for borrowers with lower incomes and lower down payments.’
The 25 basis point rise was proposed last week as part of the Obama administration’s report to Congress on reforming the nation’s housing finance system, and was detailed in President Obama’s fiscal year 2012 budget released Monday.
According to FHA, this premium change enables the agency to increase revenues at a time when it is critical to safeguard the stability of its Mutual Mortgage Insurance fund, which had capital reserves of approximately $3.6 billion at the end of FY 2010. The new pay structure is estimated to contribute nearly $3 billion annually to the fund.”