Five Powerful Buying Strategies
* Don't Get "Pre-Qualified"!
Do you want to get the best house you can for the least amount of money?
Then make sure you are in the strongest negotiating position possible. Price
is only one bargaining chip 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, we 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 surface. Some of
the problems include recorded judgments, child support payments
due, glitches on the credit report (due to any number of reasons both
accurate and inaccurate), down payments that have not been in the
client's bank account long enough, etc. So the way to make a strong offer
today is to get "underwriting 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 we recommend all clients have in their negotiating arsenal.
* Sell First, Then Buy
If you have a house to sell, sell it before selecting a house to buy! Contingent
sales rarely work, unless it's with a new home builder who has other houses
to sell and can afford to put one on a contingency. Imagine that we go out
looking for the perfect house for you. We find it and you love it! Now
you have to go make an offer to the seller. You not only want the seller
to reduce the price, but you also want them to wait until you sell your
house. The seller figures that's a risky deal, since he might pass up a
buyer who doesn't have to sell a house while he's waiting for you. The
seller will probably agree to either the contingency or the reduced price,
but not both. This causes you to pay more for the house than you could
have without the contingency. Now you're in the position that you have to
sell your existing house in a hurry, or you lose the dream house. So to sell
quickly you might take a less attractive offer than you would consider if
you'd had more time. The bottom line is that buying before selling might
cost you TENS OF THOUSANDS of dollars. We always
recommend that you sell first, then buy. 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 nine things you want in the new place.
Then make a list of the nine things you don't want. We call this "Nine of
This and None of That". You can use this list as a scorecard 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 homes. When
house hunting, keep in mind the difference between "skin" and "bones". The
"bones" are things that cannot be changed such as the location, view, size of
lot,
noise in the area, school district, and floor plan. The "skin" represents easily
changed surface finishes like carpet, wallpaper, color, and window coverings.
Buy the house with good "bones", because the "skin" can always be changed to
match your tastes. We 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. Go to the Multiple Listing computer with
your agent to make sure that you are getting a COMPLETE list. In the late
1980's early 90's, 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 neighborhoods and school
districts of the area you're considering. Information is available on every
school, such as class sizes, percent of students that go on to college,
SAT scores, etc. You can get this information from your agent or directly
from the school. Even better, you can find a wealth of related information
on your agent's website.
* Stop Calling Ads!
A word of caution - sellers create ads solely to make the phone ring! Many
homes have some drawback 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, be very
careful when reading ads. Remember that the person writing the ad
is looking for a buyer and not necessarily one for that property! The most
important thing you can do is to 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 pick a real estate agent you feel
comfortable with and enlist the services of that real estate 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 a real estate agent hears
of a great buy, who do you think he's going to call? His client, with whom he
has
a legal obligation to work hard for, or someone who just called on the phone and
said "keep your eyes open"? To get the best buy on a property, find your
own real estate agent and stick with them.
