What’s the difference between highest and best in a purchase offer?

You often hear the term “Highest and best offer” when listing agents reply to buyer agents in a multiple offer situation.

 

So what’s the difference?

 

The “highest” part is obvious. That’s the purchase price listed at the beginning of the offer.

 

But of course, that purchase price often doesn’t translate into the most money in a seller’s pocket after all is said and done. A number of contingencies can eat into those dollars, so there may be times when the lowest offer actually nets the seller the most money.

 

What contingencies prevent an offer from being the best?

• A buyer’s request for assistance with closing costs.
• A request for an allowance to replace flooring, a furnace, etc.
• A high dollar amount for repair requests following an inspection.
• A request for seller-paid inspections.
• A request for items to be included – things like a riding mower or detached hot tub.

Each of these items directly reduces the dollars coming to the seller at closing, but they aren’t the only contingencies that can prevent an offer from being seen as the “best.”

 

Consider the closing date. This will matter a great deal to some sellers – especially those who are making payments on a house they no longer occupy or are waiting for a closing so they can purchase a home in a new location. The sooner the closing, the better it looks to them.

 

Then there’s the appraisal contingency. While buyers with low down payments must make their offers contingent on the appraisal, those with high down payments and/or extra money in the bank can go forward whether or not an appraiser agrees with their purchase price.

 

Financing also plays a role. A seller might well accept a slightly lower offer from a buyer who is purchasing with his or her own cash than from a buyer who must obtain a mortgage loan.  

 

If you want the house – give it your best shot.

When searching for a home in a seller’s market, you’re very apt to be facing competition.

 

So make your first offer a good one – and if the agent calls for your “highest and best,” do realize that you probably won’t get a 3^rd chance.  Instead of a counter-offer, a “less than best offer” may well result in a rejection.

Can you buy a house if you have a student loan?

While many believe that the answer is no, the real answer is “probably.”

 

It all depends upon the expertise of your lender. That means the first question you need to ask of any lender is “Do you have experience in placing loans for buyers with student loans?”

 

Some will tell you “No – it can’t be done.” Keep asking until you find a loan originator who says “Yes.”

 

There’s no doubt, placing a home loan for a client who has student loans is a bit more challenging. The problem begins with the fact that there are many kinds of student loans:

• Private loans – with a variety of loan terms and repayment plans
• Federal loans – also with a variety of loan terms and repayment plans

Your loan repayment might be based on future income; you might have an interest-only plan; you may have exercised an option to defer payments. All these things must be taken into consideration.

 

To make things more confusing, each different loan type has its own method of reporting to the credit bureaus. Some report the balance due only. Some report the minimum payment requirement. Some show that a deferment is in effect.

 

Very few report the terms of the loan or the balance required to pay the loan in full.

 

Next consider the source of funds for your new home purchase.

Fannie Mae, Freddie Mac, FHA, and VA each have their own rules – and each has their own guidelines regarding how they view student loan debt.

 

An experienced Mortgage Originator understands how each of these entities operates and will work hard to match your specific situation to a loan program that will work for you. He or she will need copies of your Student Loan Statements and Your Loan Agreements, of course in addition to the routine documents regarding your income, employment, monthly debts, etc.

Becoming pre-approved for a mortgage loan before you begin to shop is always important. It’s doubly important if you have student loans, simply because it may take you a bit longer to locate a Loan Originator with the experience you need.

Once you have that approval, be sure to let your real estate agent know what kind of loan you will be getting, as that could affect which homes you should view. FHA and VA, for instance, have set guidelines regarding the home itself.

 

Should YOU look into purchasing a home before your student loans are paid off?

It all depends upon your circumstances. While I would never encourage anyone to go into debt over their heads, you might find that owning a home is less expensive than renting. Call me - let's discuss what's available in today's market.

 

Selling your home? Point out its pet-friendly feature.

For years, real estate agents and home stagers have advised removing all signs that a pet lives in your home. They’ve said “Hide the pet beds, the food bowls, the toys, etc.” And of course, they want the pets out of the house for showings.

 

Getting them out of the house is still a good idea. Pets can be totally distracting to pet lovers and totally off-putting to non-pet lovers. Plus, there’s always the risk of a door being left open and a pet escaping into a busy street.

 

But as for removing all signs of pets – maybe not. A new report on Realty Times even suggested that you might want to hang a photo of you with your dog, place a basket of dog toys on the hearth, or leave a dog or cat bed in plain view – even if you don’t own any pets.

 

Why should you show that your home is pet friendly? Because 68% of the households in the U.S. are pet households – and that number will grow as more millennials purchase homes.

 

My thoughts – if you don’t have a pet, don’t fake it. If you do have a pet, make sure that dog or cat bed is clean and your floors aren’t floating in hair. There is still 32% of the population that doesn’t own pets – and some of those people have allergies.

The bottom line is that it’s good for your home to look pet-friendly, even if you don’t own a pet yourself.

 

The article sited a new report showing the reasons why millennials are buying homes today.

 

The #3 reason was so they can have a better space or yard for a dog. As we all know, renting with a dog is either prohibited or expensive, and millennials want to own dogs – even more than they want to get married or have children. (The #1 reason was to have more space, while #2 was an interest in building equity.)

 

33% stated a desire for pet ownership / a better place for their dogs as the reason why they purchased a home. In addition, 42% said the desire to own a dog will be their reason to buy in the future.

And don’t forget about the Baby Boomers. A few years ago, some predicted that as we age, pet ownership will go down. That hasn’t happened. In fact, Boomers who now have no need to support children are turning that attention to their pets – spending more on food, toys, treats, and veterinary care than ever before.

 

For them, it might be a good idea to show how easy it would be to install a pet door into an enclosed back yard.

 

And if you’re buying and thinking of future resale value? Now, along with buying into a good school district, you might want to take a look at the Homeowners Association Rules regarding pets. Buying into a neighborhood with a restriction on the size or number of pets just might reduce your future resale value.

How to ease your worries when your neighbor’s house is for sale…

It’s natural to feel concerned when you realize that you’re going to have new neighbors – especially if those new neighbors will be right next door.

You wonder – Will they care for the house or will their presence bring down values for homes in the neighborhood?

One good way to be assured that your new neighbors will exhibit pride of ownership is to make sure that your own home looks as attractive as possible. Enhancing your home's "curb appeal" will help your neighbors attract buyers who want to live in a well-kept neighborhood.

Here’s how:

 

• Fertilize the lawn – then keep it neatly mowed. Weed the flower beds, trim the shrubs, and be sure to keep the yard “picked up” and looking pretty. While you’re at it, set an attractive pot of bright flowers next to the front door.
• Mend your fences – If you have a fence and it needs a bit of repair to stand straight and proud, get that done. Does it need a new coat of paint? Paint it!
• Does the house need a bath? Then give it one. Rent a power washer or hire someone to come in wash off the dust.
• Encourage your neighbors to join the fun – by getting the exteriors of their own homes in top condition.
• Spread the word! Let your family, friends, and co-workers know that the home next door to you is for sale. If they’re interested, get a flyer and send or give it to them.

    

These steps will help assure that your new neighbor will be someone who cares about the appearance of the neighborhood – and is likely to help you maintain your own home’s value.