How to Make Your Home Offer Stand Out: Ways to Avoid Contingent Offers.

What is a Contingent Offer?

In real estate, a contingent offer is a type of offer made by a buyer that includes certain conditions that must be met before the sale can be finalized. These conditions, or “contingencies,” protect the buyer by allowing them to back out of the deal without losing earnest money. Common contingencies include financing (the buyer must secure a mortgage), home inspection (the home must pass inspection), and appraisal (the property must appraise at or above the offer price). Many of these contingencies are expected, but the most challenging is the home sale contingency.

While contingent offers are a common part of many real estate transactions, they can sometimes complicate or slow down the process. Sellers may prefer offers without contingencies, as they offer a more straightforward path to closing. If you’re a buyer, understanding contingencies and how to navigate them can help you make a stronger, more competitive offer.

Ways to Avoid Making an Offer Contingent on the Sale of Your Current Home

1.   Check Your Finances

Checking your finances thoroughly before making a real estate offer is like building a strong foundation for your homeownership journey. Can you make an offer without selling your current home first?

Think of it this way:

Confidence is Key: When you know exactly what you can afford, you can make confident decisions and feel more relaxed throughout the process. No more worrying about unexpected costs or scrambling for financing!

Stronger Offers: Sellers love to see serious buyers. By demonstrating that you're financially prepared, your offer becomes much more attractive. This can give you a real edge in a competitive market.

Smooth Sailing: Contingencies, like needing to sell your current home first, can slow things down. By having your finances in order, you can often avoid these delays and close the deal much quicker.

Piece of Advice:

Talk to your lender: Get pre-approved for a mortgage. This gives you a good idea of how much you can borrow and shows sellers you're a serious buyer. Get pre-approved with a lender who can have you approved through underwriting, so there won't be any unfortunate surprises.  We highly recommend Chris Garcia with Movement Mortgage.

Know your budget: Figure out your monthly expenses, debts, and savings. This helps you determine a realistic price range for your dream home. It also helps you avoid overspending, reduces financial stress, and ensures you make a sound investment.

It can give you the focus on homes that are within your price range, saving you time and emotional stress as well as not falling in love with properties you can’t afford.

Improve your credit: Your credit score plays a crucial role in determining your eligibility for a mortgage, the interest rate you’ll receive, and the loan terms. Improving your credit score before buying a home can save you thousands over the life of your loan. If your credit score needs a boost, take steps to improve it. 

Create an Emergency Fund: Aim for 3-6 months of living expenses to cover unexpected costs. An emergency fund helps cover mortgage payments and essential living expenses during difficult times.

With an emergency fund, you’re less likely to rely on credit cards or loans for unexpected costs, which could lead to high-interest debt. It keeps your finances stable and your credit intact.

Knowing you have a safety net can ease the pressure during the home-buying process and after moving in.

2.   Check Your 401k

A 401(k) is a valuable retirement savings tool. If your employer offers one, it's generally a good idea to participate and contribute as much as you can, especially if your employer offers a matching contribution. 

Think of your 401(k) as a secret weapon in your home-buying arsenal.

Stronger Offers: A healthy 401(k) can give you a serious advantage. A larger down payment, often made possible by your 401(k), makes your offer look super strong to sellers. It shows you're financially stable and serious about buying.

Less Stress, More Confidence: When you know you have a financial cushion, like a well-funded 401(k), it takes a lot of pressure off. You feel more confident in your offers and can navigate the home-buying process with more ease.

Reduced Contingencies: A larger down payment often means you can qualify for better loan terms and potentially even avoid private mortgage insurance (PMI). This can make your offer more appealing to sellers and reduce the need for contingencies.

3.   Taking out a HELOC (Home Equity Line of Credit)

A Home Equity Line of Credit (HELOC) is a type of loan that allows homeowners to borrow money against the equity they've built up in their home. Unlike a traditional loan, a HELOC works like a credit card: you’re approved for a maximum amount, and you can draw from it as needed during a specified draw period.

Equity: This is the difference between the current market value of your home and the amount you still owe on your mortgage.

How it works: A HELOC acts like a revolving credit line, similar to a credit card. You have a set credit limit based on your home's equity. You can borrow money as needed, up to your credit limit, and then repay it over time.

A HELOC can boost your down payment significantly, making your offer more competitive.

Impact on Contingencies: A larger down payment can:

• Improve your loan-to-value (LTV) ratio, making you a less risky borrower.
• Potentially reduce or eliminate the need for private mortgage insurance (PMI).
• Increase your chances of getting your offer accepted, especially in competitive markets.

Importance of Consulting Professional

Consulting with professionals can smooth out the home-buying journey and help you avoid those tricky contingent offers. Buying a home is a significant investment, and navigating the process without a contingent offer requires careful planning and expertise. Here’s why working with a real estate professional is crucial:

Expert Guidance: Real estate brokers and mortgage lenders are like your own personal guides. They know the market inside and out, can help you find the right home, and advise you on the best way to make a strong offer.

Negotiation Power: A good real estate broker can negotiate on your behalf, potentially getting you a better deal and minimizing the need for those pesky contingencies.

Reduced Stress: Navigating the home-buying process can be stressful! Professionals can handle much of the paperwork, research, and communication, giving you peace of mind.

Avoiding Pitfalls: They can spot potential problems you might miss, like hidden issues with a property or unexpected costs, helping you avoid costly surprises down the line.

Think of it this way: Just like you wouldn't try to perform brain surgery yourself, it's always a good idea to have experts on your side when making such a big decision as buying a home.

Partnering with a real estate professional is essential when buying a home while avoiding a contingent offer. Their expertise ensures you make informed decisions, present a strong offer, and navigate the process with confidence.

CONCLUSION

Buying a home is an exciting journey, and at Sievers Real Estate, we’re here to make it as smooth and stress-free as possible. Avoiding contingent offers can feel overwhelming, but with the right strategies and a trusted partner by your side, it’s entirely achievable.

Our team is ready to help you every step of the way. We’re committed to understanding your unique needs and crafting a plan that works best for you and your family.

At Sievers Real Estate, your goals are our priority. Let’s work together to navigate the market and secure your dream home—without the hassle of contingencies. Ready to get started? We’re just a call or message away!