How to Use a Financing Contingency to Win a Bidding War


Aug 4, 2021 Homebuyer blog

Today’s Florida housing market is seeing some crazy times because there are so many buyers competing for houses, yet the housing inventory remains low. Almost everyone who wants to move to Florida knows that homes in The Sunshine State are flying off the shelves. That’s why there’s almost always a bidding war on some of these properties.

Bidding wars can be challenging for some buyers who can only buy a home if they qualify for a loan. Most of them feel that a financing contingency prevents them from acquiring their dream homes, especially when other bidders for the property are giving out offers in cash.

Brandon Brotsky of Reach Home Loans, one of Florida’s leading lending agencies, shares his insider knowledge so that borrowers can use their financing contingency clause to win in a multiple-offer situation.

Helping Clients in a Bidding War

Reach Home Loans understands how challenging the housing market is in Florida right now. Due to the housing inventory being so low, some buyers are willing to bid more than the asking price just to be more competitive. To help their clients who need to apply for a mortgage first to make offers on the house, their company came up with the idea of underwriting the files upfront.

“Something that we’ve been doing is actually underwriting the files upfront. So that way, we know that they’re solid as can be at the time that the offer is submitted on a property.”

One of the advantages of underwriting upfront is that homebuyers can waive their financing contingency. It will come in handy, especially when they’re confident that they’ll close on the property.

“This makes your offer no different than that of a cash buyer. And it gives a lot more confidence to the seller and their agent when reviewing offers and determining which one they want to go with, specifically in a multiple offer situation.”

How it Happens

Homebuyers who would like to get this offer should look for a lender who offers this type of service. With underwriting the files upfront, you submit all the necessary documents and skip the pre-approval stage. They’ll take your documents to be submitted for underwriting. The underwriter will be the one who will review your documents and make the final decision. The two remaining requirements then to qualify for a loan would be a property appraisal, if once required, and a clear title.

“So when you submit your offer on the property, you can actually state that your loan’s already been through underwriting. You can have a zero-day financing contingency, which as I said, makes your offer as competitive as a cash offer because there’s nothing holding you back from closing on the property.”

Waiving Appraisal Contingency

Since houses are fast-moving and there’s very little left in the inventory, most buyers are willing to pay more than the asking price or waive their appraisal contingency clause. The actual costs of the homes haven’t caught up with what buyers are willing to pay. That’s why there are some instances where homes are not being appraised at what they’re being offered.

“Another thing you can do to be competitive, and combine this with waiving your financing contingency, is adding some sort of verbiage that states you’re willing to pay above the actual appraised value of the property but no more than what you’ve agreed to.”

Closing Thoughts

There are ways to be a competitive buyer in a multiple-offer situation, especially in a housing market where the houses sell fast. Just because you have to secure a loan first before making your offer doesn’t mean you can’t outbid other sellers. Sometimes, all the difference is that you need to work with a lender who understands the market and puts their clients’ needs first.

Are you interested in having your underwriting upfront? Get in touch with Reach Home Loans now so we can show you more tips on how to be a more competitive buyer. Call us now at 954-703-1465!

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