Five Smart Home Buying Strategies
1. Don't Get "Pre-Qualified!" Get Loan
Approved!
If you want to get the best price and terms possible
you must be in the strongest negotiating position
possible. Price is only one bargaining chip in the
negotiations. The sellers may need to close escrow as
soon as possible or they may be willing to pay the
buyer’s allowable closing costs. If you have a lender’s
letter of loan commitment in hand, your lower offer may
prevail over another where the buyers have not even
talked to a lender.
I have always insisted that my buyer clients talk to
a lender before we start looking at properties. Based on
the information you provide the lender they pronounce
you "pre-qualified" and issue a certificate that you can
show to a seller. Informed sellers know that these
letters, while better than nothing are rarely worth the
paper they are printed on. Until the buyer’s credit has
been examined and their income and debt obligations have
been verified, serious problems can arise.
Get “pre-approved". After all
information has been checked and verified you are
actually APPROVED for the loan. The only loose end is
the appraisal on the property you want to buy. This
process takes anywhere from a few days to a few weeks
depending the type of loan and the demand for appraisals
at the time.
2. Sell First, Then Buy
Waiting to sell before you buy is a lose, lose
endeavor. Contingent offers are weak offers at best.
There are no assurances to the seller that your home is
priced to the market or that the listing agent is doing
a competent job of marketing it. A seller might accept
it, but at full price and with a “bump clause” that will
force you to remove that contingency within a specific
(usually short) time frame or lose the deal to another
non contingent offer. You don’t have negotiating room on
the offer.
Now you have to sell your existing house, and in a
hurry, otherwise you lose the dream house! To sell
quickly you might take an offer that's lower because
time is short. You don't have negotiating room on the
sale.
This lose-lose could easily cost you thousands of
dollars needlessly.
If you're concerned that there's not a house out
there for you, then go on a window shopping trip. You
can identify possible houses and locations without
falling in love with a specific house. If you feel
confident after that, then put your house on the market.
But when you walk through an open house always remember
who is working for whom.
Another tactic is to make the sale
"subject to seller finding suitable housing". Adding
this phrase to the listing means that when you do obtain
an acceptable offer, you will have ample time to find
your new home. If you don't find anything to your
liking, you don't have to sell your present home.
3. Educate Yourself and your Realtor
Make a list of needs and wants and know
the difference. Rate them according to importance. Many
things can be changed easily like colors and carpet.
Others can be done but at considerable cost. Kitchen
renovations and room additions are expensive but could
make an okay house into your dream home. Location is
final. Be sure you like the neighborhood. Educate
yourself as to future development nearby. Where are the
schools? How close to shopping are you? How bad is the
traffic noise? Your Realtor can help you with these and
other questions but always confirm critical details
yourself.
4. Don't Be Afraid To Make An Offer.
If you make “low-ball” offers you run
the risk of offending the sellers and not getting the
chance to come up in offer price. In a fast market, as
is the case in an entry level home market, a well priced
home may attract multiple offers. The "low-ball" offer
will be rejected out of hand. Your Realtor should
research the recent sales in the neighborhood to
determine market value. He or she should “investigate”
the needs of the sellers to see if their motivation
level is high. You should be shown other similar
properties and very quickly you will have apples to
compare with other apples in the price range.
5. Stop Calling Ads!
A word of caution - agents create ads solely to make
the phone ring! Many of the homes have some drawback
that's not mentioned in the ad, such as traffic noise,
power lines, or litigation in the community. What's not
mentioned in the ad is usually more important than what
is.
For this reason, you should be very careful when
reading ads. Remember that the person writing the ad is
representing the seller and not you! The most important
thing you can do is to have someone on your side looking
out for your best interests. Your own agent will
critique the property with an eye towards how well it
meets your needs and will point out drawbacks you should
know about.
So whether you decide to work with me or not, pick an
agent you feel comfortable with and enlist the services
of that agent as a
Buyer's
Broker. Then you become a client with all
the rights, benefits, and privileges created by this
agency relationship, and you're no longer just a
shopper. |
