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've 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 decorating skills.
Don't Be Pushed Into Any House
You
should rely on your Realtor to guide you to the best homes
on the market based on your price range and search
criteria. Go to the Multiple Listing computer with your
agent to see for yourself what is available in your price
range. Today’s market is much like it was in the late
1980's in that homes are selling quickly, sometimes the
same day they go on the market. So, listen to and trust
your Realtor and if you see a property you really like,
jump on it before someone else does!
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.
