Creative Mortgage Financing in Competitive Real Estate Market

( I recently met with Cross Country Mortage. They are really tuned into the reality of multiple offers in the Denver real estate market. Here are some creative financing solutions they have to help buyers compete.-Elizabeth)

Wes offers creative financing solutions to help buyers compete in this real estate market.

By Wes Tool, CrossCountry Mortgage

Creative mortgage financing can be helpful in our competitive Denver real estate market. Some price points below $400,000 are quickly becoming discouraging places for those looking to purchase homes.

Whether first time homebuyers, move up buyers, or investors find that they are competing against a dozen or more offers. Often, they are beat out by cash buyers, and spending days upon end at home showings, only to be disappointed! Buyers need great representation from Realtors who have new ideas to help create the winning offers.

Just a couple weeks ago, I heard of a property that received 47 offers on it in 2 day…47 OFFERS?! Homebuyers with hope are hard to come by.

Multiple Offers Create Competition

So what’s the problem? Why is this happening? The simple answer is that it all comes down to supply and demand. The demand for real estate in Denver Metro is insanely higher than the supply, or inventory. Experts say that a healthy market takes 180 days to sell off all the inventory. Denver Metro is consistently riding between 20-30 days to sell off all available inventory!

With all this in mind, how can homebuyers even get a chance in this market? While some Realtors are preaching only patience, there might be some other alternatives. We call our solution “Creative Contracts”!

Imagine this…

You find a house you absolutely LOVE—like perfect in every way…hardwood floors, marble countertops with subway tile backsplash, complete with those ever-so-cool brass hardware finished, and a master suite that makes you never want to take a vacation. With this kind of property in your price range, you’re certain it would be gone by tomorrow for well over asking price. It’s the curse of multiple offers.

Creative Mortgage Financing

But, you’ve got a leg up because you are going to write a “Creative Mortgage Financing Contract”. That’s one that stands out from the other offers! Here’s what that means:

1. FULL UPFRONT UNDERWRITE—Typically, lenders look at things like your credit score, your debts, your incomes, and your down payments to determine the amount you qualify for. This is called a pre-approval. Everyone has this. However, in a Creative Contract, you fully go through underwriting and get 100% APPROVED before putting offers in on a house. This is very rare for a lender to do, but sure sets your offer apart!
2. 15 DAY CLOSE—Most residential real estate contracts are written for 30-45 days. The reasons for this is the time it takes a lender to underwrite a file and get an appraisal. With underwriting out of the way, a quick appraisal turn time can allow the process to go fast.
3. 30 DAY RENT BACK AT NO COST TO SELLERS—Even though a 15 day close is nice, many sellers are not prepared to move out in 15 days. That being said, writing a contract for a 15 day close with a 15-30 day rent back gives the sellers the fast close, but time to still move out. These conditions make the contract stand out immensely against other offers.
4. CASH GUARANTEE TO SELLERS—All of the above sound great on paper, but many sellers (and realtors) doubt that these can even be accomplished on time. So how does a $5,000 guarantee paid to the sellers (by your lender) that your lender will close on time sound? Sounds like putting your money where your mouth is. That sort of confidence written into a contract is a major plus!

Tips To Winning Multiple Offers

Some other ways to win over multiple offers in the Denver market can create a competitive advantage.

1. Waive home inspection.
2. Double earnest money.
3. Have your lender call the listing agent on your behalf.
4. Write a personal letter to the seller.
5. Intentionally see the property multiple times when  time permits.

Would like more details on Creative Mortgage Financing? Just contact me using the form below.