Who doesn’t have “buying a dream home” on their bucket list? Whether you prefer a modern urban loft in the city or a suburban home with a white picket fence, we all hope to find a home that feels like it was made specifically for our family. In order to make that dream come true, 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.
Get “Pre-Approved” and not “Pre-Qualified!” When you first start looking into buying a home, you may be advised to 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.
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. But be aware, many buyers don't want to wait for you to find something, and therefore won't make an offer on properties "subject to seller finding replacement property".
Make your lists. 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 highest score wins! This helps avoid confusion and keeps things in perspective when you’re comparing dozens of homes.
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 decorating skills.
Don't Be Pushed Into Any House. 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.
In a seller’s market, real estate agents will advise their clients to make an offer quickly as a well-priced home in good condition will usually move within days and often have multiple offers. The market is continuously changing and market dynamics are not the same everywhere, so there isn't always this urgency. Although nationwide we are experiencing a low supply of homes, which is lower than a 6 month supply that indicates a balanced market, make sure that you select an agent you trust and follow their advice. Take your time narrowing down your home search to the right area and community, explore the neighborhood and make sure you’ve explored all your options.
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, percentage of students that go on to college, SAT scores, etc.
Stop Calling Ads! Please note that 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, I want you to 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. Make sure you select 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 she's going to call? Her client, who she has a legal obligation to work hard for or someone who just called on the phone and said "keep your eyes open"? So to get the best buy on a property, I always recommend that you hire an experienced and diligent real estate agent who will work hard on your behalf, represent your interests and makes sure your needs are being met.