to Buying the Best House for Your Money
1. Get "Pre-Approved" - Not
Do you want to get the best property you can for the least
amount of money? Then make sure you are in the strongest negotiating
position possible. Price is only one element in the negotiations,
and not necessarily the most important one. Often other terms,
such as the strength of the buyer or the length of escrow, are
critical to a seller. In years past, I always recommended that
buyers get "pre-qualified" by a lender. This means that you
spend a few minutes on the phone with a lender who asks you
a few questions. Based on the answers, the lender pronounces
you "pre-qualified" and issues a certificate that you can show
to a seller. Sellers are aware that such certificates are WORTHLESS,
and here's why! None of the information has been verified!
Many times unknown problems can come to the surface! Some
of the problems I've seen include recorded judgments, alimony
payments due, glitches on the credit report due to any number
of reasons both accurately and inaccurately, down payments that
have not been in the clients' bank account long enough, etc.
So the way to make the strongest offer today is to get "pre-approved".
This happens AFTER all information has been checked and verified.
You are actually APPROVED for the loan and the only loose end
is the appraisal on the property. This process takes anywhere
from a few days to a few weeks depending on your situation.
It's VERY POWERFUL and a weapon I recommend all my clients have
in their negotiating arsenal.
2. Sell Your Property First, Then Buy the House
If you have a house to sell, sell it before selecting a house
to buy! Contingency sales aren't nearly as strong as one that
comes in with a ready, willing and able buyer. Consider this
scenario: You've found the perfect house - now you have to go
make an offer to the seller. You want the seller to reduce the
price and wait until you sell your house. The seller figures
that this is a risky deal, since he might pass up a buyer who
DOESN'T have to sell a house while he's waiting for you. So
he says OK, he'll do the contingency but it has to be a full
price offer! You have now paid more for the house than you could
have because of the contingency, and you have to sell your existing
house in a hurry! Otherwise you lose the house! So to sell quickly
you might take an offer that's lower than if you had more time.
The bottom line is that buying before selling might cost you
THOUSANDS of dollars.
If you're concerned that there is not a house on the market
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. Another tactic is to make the sale ''subject
to seller finding suitable housing''. Adding this phrase to
the listing means that WHEN YOU DO FIND A BUYER, you will have
some time to find the new place. If you don't find anything
to your liking, you don't have to sell your present home.
3. Play the Game of Nines
Before house hunting, make a list of things you want in the
new place. Then make a list of the things you don't want. You
can use this list as a guide to rate each property that you
see. The one with the biggest score wins! This helps avoid confusion
and keeps things in perspective when you're comparing dozens
When house hunting, keep in mind the difference between ''STYLE
AND SUBSTANCE''. The SUBSTANCE are things that cannot be changed
such as the location, view, size of lot, noise in the area,
school district, and floor plan. The STYLE represents easily
changed surface finishes like carpet, wallpaper, color, and
window coverings. Buy the house with good SUBSTANCE, because
the STYLE can always be changed to match your tastes. I always
recommend that you imagine each house as if it were vacant.
Consider each house on its underlying merits, not the seller's
4. Don't Be Pushed Into Any
Your agent should show you everything
available that meets your requirements. Don't make a decision
on a house until you feel that you've seen enough to pick the
best one. A decade ago, homes were selling quickly, usually
a few days after listing. In that kind of market, agents advised
their clients to make an offer ON THE SPOT if they liked the
house. That was good advice at the time. Today there isn't always
this urgency, unless a home is drastically underpriced, and
you'll know if it is.
Don't forget to check into the
SCHOOL DISTRICTS of the area you're considering. Information
is available on every school; such as class sizes, % of students
that go on to college, SAT scores, etc. You can get this information
from this web site.
5. Stop Calling Ads!
Please note - ads are sometimes
created 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, 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 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
any 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. Did you know that many homes are sold WITHOUT A SIGN
ever going up or an AD EVER BEING PUT IN THE PAPER? These "great
deals" go to those people who are committed to working with
one agent. When an agent hears of a great buy, who do you think
he's going to call? His client, who he has a legal obligation
to work hard for you, or someone who just called on the phone
and said "keep your eyes open"? So to get the best buy on a
property, it is recommended that you hire your own agent and
stick with him or her.
Article reprinted courtesy of
Real Estate Solutions.