5
Secrets to Buying the Best House for Your Money
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.
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