Multiple offers, seller paid closing costs HELP!
The current real estate market Minneapolis-St. Paul is the seller's market. The first question I get from most homebuyers is why? There's a lot of reasons for this but I would guess the first and most important one is many home sellers don't know where they want to go. There's a lack of inventory for them as well. Especially for looking at a large population of the baby boomers. Most of those people are looking to downsize from a larger two-story home to a one level townhome or rambler. Both of those styles of homes are in huge demand.
This is creating a seller's market because of the low inventory that is resulting now directly into multiple offers. So the question becomes how as a buyer do you compete in a multiple offer situation? The easy answer is to have a plan. That may sound silly but the point is, sit down with your real estate agent and your loan officer before you write an offer and have this conversation. You have to be prepared for a variety of situations you may encounter.
Let's use seller paid closing costs as an example. The rule of thumb is if you can afford to pay your own closing costs you're always better off. Not only are you more attractive to a seller but if you have the seller paid closing costs it's just a legal way of financing those closing costs into your monthly mortgage.
Some of the options you have with this aside from paying all of your own closing costs would be to put less money down, save some extra cash to pay your closing costs. If that's not an option perhaps you could take a little bit higher of an interest rate to have the bank cover some of those closing costs. Either way, if you are putting down less than 20% you're will not avoid the PMI (private mortgage insurance). But these are the types of conversations you want to have well before you're ready to write an offer on a home. It's the only way you can compete in a multiple offer situation.
The best advice I can give you is to find a qualified real estate agent who is willing to sit down and give you these choices. Along with a trusted loan officer that can help to advise you. If you're shooting from the hip, finding a home and worrying about the rest of it after your putting yourself at a huge disadvantage.
Tom Sommers 952-994-7204
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