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With so many houses available today, competition is heating up among homebuyers. In fact, 55% of August 2020 home sales resulted in a bidding war AND 69% of homes sold were on the market for less than one month! 

With that said, it's important to be prepared for a bidding war, especially if you've found your dream home. Being prepared means you'll be able to move quickly and confidently in today's competitive market.

Below you'll find three important tips to help you prepare for a bidding war.

Don't forget to check out our recent blog on how to write an award-winning Real Estate Offer Letter. 

 

Some Highlights

  • With so few houses available on the market today, being ready for a bidding war is essential for prospective homebuyers.
  • From pre-approval to making your best offer, here are three tips to make sure you can act quickly and confidently when you find the perfect home.
  • Reach out to a trusted real estate professional today to be sure you have the guidance you need as the competition for homes heats up this season.
  • Reach out to Greenway Mortgage for your FREE pre-approval and for any questions you may have about the mortgage process. 


I think we can all agree that 2020 has been anything but a normal year. However, one interesting bright spot is in the realm of the housing market. Mortgage rates are at all-time lows and homebuyers are taking advantage of it, creating a very competitive real estate market. If you’ve been house hunting you know what we’re talking about.
 
With so few houses available today, competition is heating up among home buyers. It’s important to be ready for a bidding war, especially if you’ve found your dream home. How can you make yourself stand out? A real estate offer letter.
 
Data from Redfin found that in a bidding war, a personal cover letter can improve an offer’s likelihood of success by 52% - Wow! We’re here to share a few tips and help you write an award-winning letter so your dream home doesn’t slip away.
 
Before you start, gather the few essential elements for the letter such as the property’s address and the buyer and seller’s names. Here are a few more tips on what else to include when writing that convincing offer letter.
 
#1 Sincere Flattery Goes a Long Way – make an emotional appeal!
  • Explain why you want the property.
  • Tell the seller why you love their home and why it’s an excellent fit for your family. For instance, if the seller has lived in their home for 20+ years and raised a family of their own there, they may be focused on selling their home to someone who will take good care of it.
#2 Make a Personal Connection
  • During your walk-through take note of some items in the house. For example, did you love their garden? Was your alma mater’s flag hanging in the garage?
  • Big or small, by sharing a common interest in your letter, you’ll make yourself more relatable.
  • Don’t go overboard – keep it short and sweet! The key is to be sincere in a sentence or two.
#3 Provide Your Offer Details
  • In your letter, make sure to include your offer price, earnest money deposit, loan status and the amount of your down payment.
#4 Include Your Mortgage Pre-Approval Letter
  • Having a pre-approval letter is more important than ever.
  • A pre-approval letter is an official letter from your lender (Greenway Mortgage) that provides documentation of exactly how much you are approved to borrow.
  • Note: A seller may not consider your offer without a pre-approval letter.
  • Sellers look for buyers that are pre-approved because it gives them confidence that you can secure the financing needed to complete the home purchase.
#5 Outline your Contingencies
  • Contingencies are the conditions that must be met by either the buyer or the seller before the home buying process can move forward.
  • Common contingencies include securing financing for the property, a home inspection and home appraisal and sale of the buyer’s existing house. 
  • Be transparent about your expectations. Include the proposed closing date.
#6 Proofread Your Letter
  • Before you deliver your award-winner letter, make sure you proofread it thoroughly. Mistakes may make the seller think you don’t take your offer seriously.
#7 Keep it to One Page
  • Remember what we said before? Short and sweet. No one wants to read a lengthy letter of your personal history.
  • Keep your letter to one page, even if you have to make a few edits.
  • Focus on a few of the most important reasons why you are the BEST buyer for the home.
#8 Thank You
  • Don’t forget to close with a thank you!
  • Finish the letter off by expressing your appreciation that the seller is considering your offer and reiterate why you are the perfect buyer.
Bottom Line:
Don’t give up! If you think you’re in danger of losing your bid to another buyer try using our tips above to write a short letter to the seller. You may think that your only option is to go above the asking price to sweeten your purchase offer. However, including an earnest money deposit shows the seller you’re a serious buyer. Reach out to a trusted real estate professional to be sure you have the guidance you need as the competition for homes continues to heat up!
 
Need a pre-approval or have home buying questions? Reach out to the trusted professionals at Greenway Mortgage.
 

On November 24, 2020 the Federal Housing Finance Agency (FHFA) announced an increase in the maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac in 2021.

The maximum loan limit for one-unit properties will be $548,250 an increase from $510,400 in 2020. Release.

The decision was based on the recovery of housing prices under the Housing and Economic Recovery Act of 2008 (HERA). They require that the baseline conforming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price.  

FHFA third quarter 2020 House Price Index (HPI) reported that house prices increased 7.42%, on average, between the third quarters of 2019 and 2020. The baseline maximum conforming loan limit in 2021 will increase by the same percentage.

For areas in which 115 percent of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit will be higher than the baseline loan limit. 

A list of the 2021 maximum conforming loan limits for all counties and county-equivalent areas in the country can be found here.

WHAT DOES THIS CHANGE MEAN FOR HOMEOWNERS AND HOMEBUYERS?

This means YOU may be able to:

  • Purchase a higher priced home with more financing options, possibly including lower rates.

  • Refinance an existing, higher-rate “jumbo” loan and possibly drop mortgage insurance.

  • Combine 1st and 2nd mortgage

Contact your Greenway Mortgage loan officer today for more details about how the increase can impact you.

2021 Conforming Loan Limits Effective January 2020


Consumer confidence slipped in November, amid a resurgence in COVID-19 cases and business restrictions, reinforcing expectations for a 4th quarter economic slowdown.
 
Durable goods orders grew at a faster than expected clip in October, demonstrating the manufacturing sector's continued support of the economy.
 
Jobless claims rose the 2nd week in a row for the first back-to-back increase since July. The rising COVID-19 count is likely causing labor market weakness.

 

 

The FHFA released the 2021 conforming loan limits to be used by Fannie Mae and Freddie Mac. Limits will rise 7.42% to $548,250 in most places and to $822,375 in most high-cost areas.
 
Home prices surged to a 6-year high in September, according to Case-Schiller. The 7% increase over last year marks the fastest 12-month gain since 2014.
 
Existing home sales grew 4.3% over September and 26.6% over last year. New home sales were also strong in October, remaining near their best pace since 2006.

 


 

 

October retail sales rose 0.3% over September. The pace was the slowest in 6 months, suggesting consumers may be growing more hesitant to spend as pandemic numbers rise.
Congress remains locked in a stalemate over a coronavirus stimulus. Increases in job losses and reduced spending could slow the economic recovery.
Jobless claims unexpectedly rose by 31,000 to 742,00 last week, as new business restrictions sparked a fresh wave of layoffs.

 

November's homebuilder confidence index for construction of single-family homes shattered record highs for the 3rd straight month, as more buyers are heading for the suburbs.
Housing starts increased more than expected in October, suggesting low rates and strong demand continue to sustain the housing market.
Mortgage applications to purchase a home rose 4% for the week, up 28% annually. Refinance application volume was down 2% for the week but was up 98% over last year.


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