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 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 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, 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.
