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1. Get "Pre-Approved" - Not "Pre-Qualified!" 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.
3. 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. 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 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.
4. 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. 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 still is that urgency due to the lack of inventory. 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,
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. 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, I always recommend
that you hire your own agent and stick with him or her.
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