Congratulations!! You have found your dream home and decided to put an offer on it! Not easy with today’s tight inventory. But… what’s that? Five other people loved it and put offers too? Well, now you’re in a bidding war. So how can you make your offer stand out in a sea of other qualified buyers? I’m Dana Sapir with Compass Manhattan and luckily, I have a secret weapon for you!
What is my secret weapon you might wonder? Well, it is called a Closing Guarantee.
What is a closing guarantee?
A closing guarantee is something you write into the contract of sale, and it says that if you don’t meet the specified closing date, the buyer or seller will be compensated. Adding a fast-closing guarantee, for instance, saying you’ll close in less than 21 days, can motivate a seller and give them more confidence in your offer, thus providing you with a competitive edge. Just like you, sellers often want to move quickly and close fast.
How much is the typical guarantee?
Your lender will usually be the one deciding this amount, and so it varies based on their regulations, but also based on what the buyer and seller agree to. Today, for example, Chase bank is offering on-time closing in as soon as three weeks or you'll get $5,000 as the buyer. Better’s closing guarantee says that if loan delays or issues on their end prevent you from closing on time, they’ll give you $2,000. The amount can be lower or higher, but it will always provide some compensation if things hit a snag.
Why is it beneficial for multiple offer scenarios?
If you have a closing guarantee it makes your offer seem more serious: you as the buyer, are offering the seller some form of compensation if things don’t go as planned. In this busy market lenders are also experiencing delays, so a closing guarantee can give both parties some peace of mind in an otherwise stressful process.
Remember to read the fine print!
Don’t forget to have your real estate agent or attorney explain the language of this guarantee in your contract whether you’re the buyer or the seller. Be sure you know exactly what will happen if the closing date comes and goes without a finished sale. And remember: this can go both ways, with either the buyer or the seller receiving money depending on who missed the date. Be sure that’s worked into the contract as well.
Source: Apartment Therapy