1. Don’t Get “Pre-Qualified!” – Get “Pre-Approved”!
You want to get the best house you can for the least amount of money. The best way to do this is to 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 it is other terms, such as the strength of the buyer, or the length of escrow, are critical to a seller. Being “pre-qualified” by a lender means next to nothing and here’s why:
None of the information has been verified! Unknown problems can surface, for example: debt, child support payments due, recorded judgments, glitches on the credit Report (which can often be outdated), down payment funds that have not been in the clients’ bank account long enough, etc.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, leaving only the appraisal on the property to be completed. Pre-approval is a powerful weapon essential to your negotiating arsenal.
2. Sell Before Buying
If you have a house to sell, sell it before selecting a house to buy! Let’s pretend that your agent goes out looking for the perfect house for you. They 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. For the seller that’s a risky deal, since he might pass up a buyer who doesn’t have a house to sell while he’s waiting on you. So it’s likely if he says OK, he’ll do the contingency but it will have to be a full price offer! In the end you pay more for the house than you would have because of the contingency.
Now you have to sell your existing house in a hurry! Otherwise you lose the dream house you wanted! So to sell quickly you might take an offer that’s much lower than if you had more time. The bottom line is that buying before selling might cost you tens of thousands of dollars. It is 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 using our Dreamhome Program. 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 great tactic is to make the sale “subject to seller finding suitable housing”. Adding this phrase to the listing means that when you find a buyer, you will have some time to find a new place. If you don’t find anything to your liking, you don’t have to sell your present home.
3. The Game of Nines
Before house hunting, make a list of nine things you want in your new place. Then make a list of the nine things you don’t want. You can use this list as a scorecard to rate the properties you see. The one with the highest score is the keeper! This will really help you to narrow down your list of possible choices in a home, clearly outlining the pros and cons of each. When house hunting, keep in mind the difference between “nuts and bolts”. Bolts are things that cannot be changed such as the location, view, the size of lot, noise in the area, school district, and floor plan. The nuts represents easily changed surface finishes like carpet, wallpaper, color, and window coverings. Buy the house with good Bolts, because the Nuts can always be changed to match your tastes. It is 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 rush into a decision on a house until you feel that you’ve seen enough to pick the best one for you. Review the Multiple Listing printout with your agent to make sure that you are getting a complete list. A lot of agents will advise their clients to make an offer on the spot if they liked the house; that was good advice at one time. Today there isn’t always this urgency, unless a home is drastically under priced. Ultimately you will know if the house you’re looking into is the one that fits your needs; while it’s good to be expedient one never wants to rush into such a large decision.
5. Stop Calling Ads!
Buyer beware – some agents create ads just to get the phone to ring! Many of the homes have some flaw that’s not mentioned in the ad, such as a noisy neighborhood, power lines, or a poor location. What’s not mentioned in the ad can be more important than what is. For this reason, it’s important for you to be very careful when reading ads. The ads are created to benefit the seller, not you, and therefore it is most important to have a dependable agent 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 potential pitfalls you should be aware of. This is why it is so important to hire your own agent to get the best buy on a property, and stick with them.