How can financing contingent buyers get their offers accepted in a cash-heavy, ultra-low inventory market?

Buying a new home in Southwest Florida can seem nearly impossible these days, if you are contingent on financing.  There are loads of buyers moving to, or purchasing second homes in Florida on a daily basis.  Many of these buyers are fully locked and loaded, ready to make cash offers in an hour’s notice.  For buyers who contingent on financing, this can be extremely intimidating.  Over the last 18 months or so, I personally have had, fully pre-approved buyers who made offers on 10+ homes before they had an offer accepted. 

When the market began to become ridiculously competitive, in late 2020/early 2021, I knew we had to adapt and evolve to the new environment.  What I began doing for my customers, was implementing a 2 pronged approach to pre-approval…essentially, doing everything humanly possible that a mortgage broker can do to bring their customers’ offers as close as possible to a cash offer.

Step 1:  While I have always performed an extremely thorough pre-approval process for my customers, I knew that a traditional pre-approval letter will no longer cut the mustard.  Listing agents and sellers need to know that the buyer’s offer is as good as gold.  Hence, I created our “Good as Gold” approval process.  When a customer applies for our Good as Gold approval, we gather ALL required documentation, verify assets, income and credit and submit the file to the lender for a full initial underwrite.  The lender then, proceeds to fully underwrite the file and provides us with a complete conditional loan approval.  This way, the seller can rest assured that this buyer is fully approved for the mortgage; at this point, the only financing issue that this buyer may run into is an issue with the appraisal.

 Step 2: Appraisal waiver prior to offer.

In 2021, 72% of my files were eligible for an appraisal waiver from either Fannie Mae or Freddie Mac; meaning that the particular buyer, paired with the particular home they were interested in qualified for a mortgage approval, without a new appraisal.  How do we use this to our advantage and when is this appraisal determination made?  Most large lenders and banks will not make this determination until the buyer already has an accepted offer.  At Naples Mortgage, we can make this determination for the buyer BEFORE they submit their offer.

Once we have the previously mentioned Good as Gold approval process complete and the buyer identifies a property they are interested in, we can plug the address into both Fannie Mae and Freddie Mac’s underwriting systems and determine if either of the GSEs will allow for an appraisal waiver.  With property values skyrocketing, appraisal waivers are abundant for buyers with a 20% down payment, purchasing a single family home as their primary residence. 

In conclusion, when we are able to show the listing agent and seller that this particular buyer is fully approved and will not need a new appraisal to obtain a final loan approval, we are essentially doing everything humanly possible for our buyer and giving their offers the highest probability of acceptance possible.  In addition, when we have these items in place, these transactions can close extremely quickly, in as little as 10 days, because we have already done the heavy lifting up front.  In the highly competitive market we have today, taking these steps can help more buyers win bids and not only help meet, but achieve all of their home buying and financing goals. 

If you are a prospective home buyer, having a difficult time getting an offer accepted, please feel free to reach out to me any time for more information.

Peter Vrehas

Broker/Owner

Naples Mortgage Company

NMLS: 250949