Armando was referred to Markita Woods to get a loan to buy as a honeymoon gift for his fiance'. Armando and Maria would marry on March 6, 2021. Armando wanted to take his new bride to a home of their own. Armando was referred to me by Julio and Christina, who just closed the purchase of their dream home with Markita. Armando would be keeping the house a secret from Maria until they came home from their honeymoon.
Armando and set an appointment with Markita Woods at American Financial Network for January 6, 2021 to talk about the style and size of the home he wanted to buy, how much buying power for which he qualified, and how much he actually wanted to spend. He looked up current interest rates on Markita’s website and he was pleased with a 2.75% interest rate. (CLICK HERE NOW TO SEE TODAY’S RATE).
Armando had over $200,000 in the bank, and a substantial income that qualified him for a 750,000 house. Markita took his application, his last two months of bank statements, his past two years of W-2's, and his two most recent pay stubs (in loan officer jargon, that's called 2, 2, and 2). I fully processed his loan, and got it underwriter approved, so that all we needed would be two weeks to get the appraisal, and prepare the closing documents.
I referred Armando Patty Blackwelder, a REALTOR at Cardinal Realty, who has over 30 years experience helping a lot of folks buy homes. Patty had an initial interview with Armando to talk about his hopes and dreams, and the reality of the market in 2021.
Patty gently but firmly briefed Armando on the reality of the current market. “It's a seller’s market, with more buyers than houses available to purchase. Houses for sale are attracting multiple offers, from 4-61 buyers (no joke, a house in Arlington attracted 61 offers). Buyers are bidding $20,000, 40,000, even $90,000 above the list price, paying all cash, no loan. Patty said, "If your limit for a house is $750,000, We will be looking at the $650,000 houses so that you have room to go up, without exceeding your $750,000 loan qualification limit.
Armando wanted a house less than five years-old, with four bedrooms, finished walk out/up basement, a 2-car garage, modern kitchen with a big island next to a big family room. Armando and Maria both work at Quantico Marine Base, so they wanted to live in Woodbridge or Dumfries so that they would have an easy commute when the COVID-19 pandemic is over, and folks start going back to their offices.
Patty entered Armando's wish list into the MLS database and three houses met Armando's criteria. Patty said, "I will make appointments to see these three houses tomorrow and we can meet at Starbucks at 2:00."
All three houses were in Potomac Shores because that's where the houses are less than five years-old and meet all of his criteria. The first house was plain inside backed to other houses; the second house was gorgeous inside, and it backed to the Jack Nicklaus designed Potomac Shores Golf Club; the third house was just as lovely as the second house, and it backed to a forest. Armando is an excellent golfer, and the chance to live in a house backing to a golf course, with a big deck was too good to pass up.
Patty and Armando went back to Patty's office to write an offer on the golf course house. Meanwhile, Armando was on the phone with Markita to get some reassurance that he was buying an affordable house. Patty pulled up the golf course houses that sold and closed over the past three months to give them guidance on how to structure the offer. One house sold for $20,000 over the list price; the next house sold for $65,000 over the list price; the third house sold for $52,000 over list price. Armando was shocked. He didn't understand what Patty meant when she said houses are selling over list price; he was expecting to go in at $10,000 under list price, ask the seller to give him a 10,000 closing costs credit, and a home warranty.
Patty said, "Do you REALLY want this house?" Armando said, "Yes, but I didn't understand paying over list price until just now. Now I understand why you said look at houses $650,000 and under so I wouldn't exceed my $750,000 loan approval. I love the house, and I love the neighborhood amenities. It just feels odd paying above the list price." Patty said, "I called the listing agent as we were driving to the office to see what he might say. He said, 'We have three offers and I will be presenting the offers to the sellers tonight'. "
Patty asked, "Would you be willing to pay $30,000 over the list price?" "Well... yes I would." "What about $50,000 over list price? That would price at $699,950." "Well, Armando was willing to pay up to $750,000.” The house is stunning, and I'd be willing to pay $750,000 for it, but not if my closest competitor comes in at $700,000 and I paid $50,000 over that price." Patty said, we're going to use an Escalation Clause so that doesn't happen to you. An escalation clause says you would pay $3,000 more than your nearest competitor, not to exceed TBD price. That way you can be assured of winning the competition up to an amount when your cry 'Uncle!'." Armando said, "Yeah, I'd like that."
Armando called Markita to find out what his payment would be at $50,000 over list price. Markita gave Armando the total payment, and he was pleased. CLICK HERE NOW FOR TODAY’S RATE ON A 30-YEAR FIXED RATE LOAN WITH A 20% DOWN PAYMENT.
They wrote the offer at $20,000 over list price with the escalation clause. Patty sent the offer to the listing agent by email, then they went on with their day, waiting for the seller to respond.
At 8:35 PM the listing agent called Patty and said, "If your buyer will go up $33,000 with the escalation clause he'll get the house. I called you from my mobile phone; you can call me back on this number."
Patty called Armando and said, "Would you pay $40,000 above list price for the house?" Silence... Then Armando said, "Yes, I'll do it. Patty said, "Well I have good news for you. Your actual winning bid with the escalation clause is $33,000 over list price." Armando got all excited and said, "Tell them yes, I'll take it!!" Patty said, "They told me to tell you that the price includes the home theater projector and sound system."
Armando got in touch with Markita to find out if there was anything else she needed from him. Markita said she needed his signature on the loan application, a document confirming his source of funds for closing, and a few more documents for the file.
Three weeks later Armando and the sellers closed on the house, and Armando gave the sellers a free three-week rent-back.
Throughout the process Armando kept the house a secret from Maria that would be revealed the day they got home from their honeymoon. Maria was speechless as she explored the kitchen, family room, master bedroom and bathroom, and the finished basement with a home theater.
Getting your home loan pre-approved, shopping homes below your top price, and using an escalation clause are three keys to a happy home search. If you want to have financial peace, see Markita Woods. You can reach out to Markita at 703-929-2274. If you want a happy house hunt, you can reach Patty Blackwelder at 703-801-9367.