Show your qualifications with offer. Swift and aggressive action is called for.
- Include recent tax returns with W2's
- Pre-approval letter from lender
- Financial statement
- Credit report
- Personal letter
- Show before and after closing liquidity
Price is usually most important to a seller but terms can make a big difference and can seal the deal.
- Don’t start offers lower than the asking price.
- Bid over ask if there are other bidders.
- Offer a larger down payment than required.
- Set closing at the seller’s convenience.
- Know what the seller wants/needs beyond the cash (tie-breakers)
- Avoid a bidding war by offering near what you think the winning bid in a war would be.
- Offer to pay flip tax.
- Offer a leaseback to the seller
- Put more money down at the contract signing
- Waive due diligence in order to sign the contract next day
Three key factors comprise the mortgage contingency, and you need to look at where you can compromise:
- Put down 25% + or put in the contract that if the apartment appraises low, the buyer will make up the difference in cash. For the buyer’s peace of mind, put a cap of 5% to 10% on it- the appraisal is not going to come in that low and it will keep you from feeling that you are taking on too much risk.
2. Building Approval:
Today not only does the borrower need to be approved the coop and/or condo project does too. 2013 building financials may not be out for another month or longer in some buildings, and if something negative pops up, the bank could pull out, so you can’t hedge on that.
- Get a mortgage broker working to qualify the building right away, and if the building is not Fannie Mae compliant, the mortgage broker can make sure there are other financing options available, and can check which financial institutions that have lent in the building in the past 3-6 months.
- Put in the contract that if the buyer’s chosen financing option is declined, they need to apply for financing through the bank or mortgage broker of the seller’s choosing before they are released from the contract via the contingency.
If you're a well-qualified buyer you can opt to waive your own approval contingency as long as the building is approved.
- Understand interest rates and loan to value (LTV) monthly payment costs and amortization.
- Work with a local loan officer or broker familiar with NYC coops and condos
- Be prepared. Hire an attorney before making offer. Have your team in place. An accepted offer is not binding. Seller has no obligation to buyer until a contract is fully executed.
- Bid an odd number. If the apartment is listed at $875,000 and you're willing to pay $900,000, bid $901,000 or $900,198 the extra thousand or $198 may be a tie breaker.