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, 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!
Oftentimes unknown problems surface! Some of the problems
I have seen include recorded judgments, child support
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 a strong 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.
Sell First, Then Buy
If you have a house to sell, sell
it before selecting a house to buy! I haven't seen a contingent
sale work in the last 3 years, unless it's with a new
home builder who has other houses to sell and can afford
to put one on a contingency. Let's pretend 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 want the seller to reduce the price and 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. So he
says OK, he'll do the contingency but it has to be a full
price offer! So you see, you paid more for the house than
you could have because of the contingency. Now you have
to sell your existing house, and in a hurry! Otherwise
you lose the dream 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 TENS OF THOUSANDS of dollars. I 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. I 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
dozens of 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. I always recommend that
you imagine each house as if it were vacant. Consider
each house on its underlying merits, not the seller's
Don't Be Pushed Into Any
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, 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 your agent or directly from the school.
Stop Calling Ads!
A word of caution - agents create
ads solely 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.
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