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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, it was always recommended that buyers get
"pre-qualified" by a lender. This meant that you spent a few minutes
on the phone with a lender who asked you a few questions. Based on the
answers, the lender pronounced you as "pre-qualified" and issued a
certificate that you could 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 that come up include recorded judgments, alimony
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 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 lender's appraisal on the property. This process
takes anywhere from a few days to a few weeks depending on your situation.
It is very powerful and a weapon that I recommend all my clients and
customers 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 offers aren't nearly as strong as an offer
that comes in from 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 isn't 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 of your current home ''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 a 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 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 the local college, SAT scores, etc. You can
get this information from this
web site.
5. Stop Calling Ads!
Please note - ads are sometimes created just 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, 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, 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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