by Ed Machart
on Friday, February 12th, 2021 at 11:37am.
Do you know what a preferred buyer is and how to attain this status? If you are serious about buying a home in the near or not so distant future, understanding how you can become one will be important to you. Becoming a preferred buyer in a seller’s market could mean the difference between an accepted offer on the home you’ve fallen in love with and not even receiving a counter offer back. So how do you gain preferred buyer status?
An Increased Deposit will go a long way to making you a preferred buyer in the eyes of the seller, showing them that you have a little bit of skin in the game. Once a seller has accepted an offer, they traditionally lose other potential buyers and/or offers, leaving them at risk if something should happen with your offer. Remember, the deposit is part of your down payment, so offering more money prior to the day of closing helps demonstrate to the seller that you are serious about the home, while also helping to bring down your overall monthly payments later on.
Possession Day Flexibility
Flexibility on moving dates and deadlines can make the deal more desirable for a seller, and may have them give your offer a higher consideration over others. Have your REALTOR try to find out what the seller’s priorities are. If they are moving into a new home, having some wiggle room can mean a lot, based on their needs and timing.
Have a Clean Offer
Make your offer as attractive and uncomplicated as possible. If your offer has a lot of conditions (i.e. conditional on the sale of your home), the seller may view these as potential roadblocks to selling. If another buyer has a “cleaner” offer and a similar price, chances are, the seller is going to accept the one with the least amount of hassle.
Have a Mortgage Pre-Approval
Mortgage pre-approval is the first and, perhaps, most important step to becoming a preferred buyer. And there are a few reasons why you will want to work with your lender to get one.
Firstly, a pre-approval will help you budget. It is recommended that you shop for homes under your maximum approval amount so that you will have room to negotiate, if necessary. This is especially important in a seller’s market, where sellers are receiving offers very close to or at their asking price. If there is a competing offer, you may even need to go above asking, and without knowing your maximum approval amount, you could be risking offering more than you can afford.
A pre-approval will also enable you to remove your financing condition much faster than if you need to start the mortgage process at the beginning. Most importantly, though, a pre-approval makes you an attractive buyer since there’s much less risk to the seller of the deal falling through due to lack of appropriate financing.
It's heartbreaking when you’ve placed an offer on a new home, only to find out your offer was not accepted. Hopefully some of these ideas will help you secure your next home. The most valuable thing you can do though, by far, is to work with an experienced real estate agent to make your offer as desirable as possible to the seller. A REALTOR who is knowledgeable in your local real estate market will know whether you should come in with your best offer to avoid a bidding war or if you can take a chance offering below asking price.