Editor’s Note: This week, we’re publishing a series of blogs to help home buyers and agents alike make their offers stand out in today's ultracompetitive real estate market. This is the first of those three. Be sure to circle back to our blog later this week for Parts Two and Three.
In today’s red-hot real estate market, being a home buyer can be a long and frustrating process – but it doesn’t have to be. We spoke with agents and lenders alike to get their best advice and top tips to make your home offer stand out amidst a flurry of competition.
And though none of these tips can remove the competitive nature of the housing market in 2022, you might not need them to: data suggests that the market is cooling ever so slightly, especially in coastal hubs like Boston.
So what does this mean for the would-be home buyer? Price appreciation is still approaching an all-time high, but those homes you’ve been eyeing might suddenly be a bit more attainable.
Which is where this series comes in: now is the time to win. And Step 1 in winning is making your offer stand out.
Here’s a closer look at our team’s first pillar of doing so: assembling your A-Team.
Assemble Your A-Team
The first thing many first-time buyers don’t realize is that buying a home is more of a team sport than it is any type of individual activity. While you might be pouring over MLS listings and jumping on every Zillow or Redfin notification the moment it pops up on your phone, it takes a lot more than awareness of what’s available to submit a competitive, appealing offer – let alone win the bid.
That’s where what our friend Chris Devin at CrossCountry Mortgage calls the “A-Team” comes in.
“There’s going to be a relationship, and your agent needs to be able to connect with your lender and your attorney,” Devin, Senior Vice President at CrossCountry Mortgage, explained. “Those are the three major players in any transaction. If they know each other and there’s synergy there, it’s going to put you in the best possible position to make sure they communicate with the listing side and capture that deal for you.”
You want your ideal team to be excellent communicators – both with each other and with the team on the sellers’ side – and work cohesively to go the extra mile and make the magic happen on your behalf.
But what exactly does your ideal team look like?
What Does Your Ideal Lender Look Like?
Use a Local Lender
When vetting lenders, it’s really important to consider the power and advantage that having a local lender can provide, and how it affects your ability to win a deal.
“I truly believe it's so important to connect with a local lender for a few different reasons,” Devin said. “First, they're going to know the market, right? There are bigger, national companies out there that will advertise at a high level. They might be very visible on TV and in the media, but they're not local, so they're not going to understand your purchase, your needs, or – most importantly – the players that are in your market.”
Real estate is about relationships, and quite often listing agents want to work with a lender they know and trust – or have at least heard of from their peers. And for a national lending service, which ultimately leaves clients and agents working with a service call center, there’s a lot of unknowns.
“If you ask a lot of top agents in the area, especially listing agents, about working with the bigger, national lenders, they’ll tell you that when they see one of those pre-approvals come across their desk that’s not from a local lender, they’ll put it at the back of the pile,” Devin explained, “because they don’t know what they’re going to get from a service center platform.”
CHARLESGATE agent Jen DeNisco agreed.
“It frightens me when buyers come to me and say they filled out a pre-approval online with a big warehouse lending agency,” DeNisco said. “Most of the time in those situations, buyers don't even have a name of a person they worked with or a personalized lender that is going to work with them throughout the process. They become a number in a system and they then don't have somebody that I can contact personally. It's more of an 800 number or something like that. Having that personal lending experience really matters.”
Why Shouldn’t You Use a National Lender?
So what’s the difference between a national lending company and your average local lender? Surely, the bigger company has the ability to provide more to the customer, right?
Not exactly. Every town or neighborhood has its own unique trends and micro market, and the nuance within that area is often missed by a national provider that could be answering your call from anywhere. Beyond that, you’re really only able to call during normal business hours. In real estate, that’s a problem.
“Real estate doesn’t only happen from nine to five,” Devin added. “A lot of times it’s done after hours – it’s done at night and on the weekends, and a local lender is typically going to be there to support you, run the numbers, update letters, and keep things moving outside the normal hours of operation.”
And when you factor in the relationship and familiarity elements that a national lender lacks, the evidence heavily favors working with someone local.
“They’re going to be available for you morning, noon, and night,” Devin said of the best local lenders. “They’re going to talk to the local agents and talk to the market, which is truly going to make a difference and potentially win you that offer.”
Red Flags When Talking to Lenders
When it comes to mortgage lending, a lot of times people don't realize that they have options.
You have your typical banks and credit unions, which can be a great option, but what people don't realize is that you're limited to specifically that bank's rates and programs. Oftentimes, that type of lending is going to be a little bit more conservative.
On the flip side, you have direct correspondent lenders, mortgage bankers, or even mortgage brokers. The benefit to that is that they're going to shop on your behalf for all the different rates and programs with a bunch of different lenders. And then they're going to do all the processing, underwriting, and closing in-house, which is really the best of both worlds: it puts you in the best position to know that you're getting the best rate and program for your situation.
Given that there’s so many different types of lending options – and so much information that goes into determining the qualification of a prospective borrower – there’s one major red flag that stands out when vetting lenders.
“I would say the biggest red flag is that if you're going to call up a mortgage loan officer or banker, and they're going to just quote you a rate over the phone without asking any questions, run, don't walk,” Devin said. “What people don't realize is that there's over 10 different data points that go into an accurate interest rate. It's not as simple as just saying ‘what's your rate?’
“So if you get a quick answer, like I said, run – don't walk.”
Another underrated element of working with a great lender is their familiarity with their clients. Listing agents have to look out for their sellers, and one of the things they’re looking for when going through submitted offers is confidence from a lender. That doesn’t happen when a national lender asks for a moment while they look you up in their system to refresh their memory.
“I tend to want to meet the agents first and let them tell me more about their clients. As offers are coming in, that relationship matters,” DeNisco explained. “The attentiveness, too. If I need to clarify something on an offer and I call an agent and they don't get back to me, that speaks volumes to how this deal could go if my clients accept that offer. So I need to be prepared for that as a listing agent.”
That relationship she describes doesn’t just extend to the agents, though.
“Once the offers come in, my job as a listing agent is to call those lenders and to verify their relationship with the buyers and understand the buying power of each of those offers that comes in,” she continued. “If a lender doesn't get back to me or doesn't really know who the client is, that speaks volumes that I can share with my seller as to how much buying power – or lack thereof – this offer and buyer may have.”
One quick tip DeNisco likes to utilize: asking a buyer’s lender to simply be proactive and make a connection with the listing agent.
“Whenever we put in an offer for a buyer, I always ask the lender to make a phone call to the listing agent and make sure that lender knows what property we're putting an offer in on,” she said. “And I ask them to call that listing agent before the listing agent needs to contact them. And in that way, they're proactively advocating for the buyer and the listing agent then knows that the communication and the buying power of this particular buyer with this offer is solid.”
What Does Your Ideal Real Estate Agent Look Like?
Beyond the communication elements we’ve already discussed, the most important element you want your ideal real estate agent to have is professionalism.
Professionalism isn’t hard, but there’s little things that really make an impact. A few of the best traits to look for:
- Agents are always personable and professional, regardless of who they’re interacting with.
- They answer or return phone calls, text messages, and emails in a timely manner.
- They show up on time to appointments
- They push for a shared goal of a smooth transaction for everyone involved.
- Other agents want to work with them.
Remember what we said before? Real estate is about relationships. And part of establishing those relationships is having gravitas. You want to not only create relationships with fellow agents, lenders, and other players in your local market, but also to instill a great impression upon them to remember you by.
An agent can really stand out, establish great relationships, and carry themselves with an aura of respect and gravitas just by being a true professional. If they do, they’re going to have an automatic advantage during negotiations and help buyers close deals.
Be sure to check back in on our blog later this week for Parts Two and Three in our Tips to Make Your Offer Stand Out series.