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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.
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 of homes.
When house hunting, keep in mind the difference between "STYLE AND
SUBSTANCE". The SUBSTANCE is the set of 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 isn't always this urgency, unless a home is
drastically under priced, 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, 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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