1. Get Pre-Approved – Not Pre-Qualified
To get the best property you can for the least amount of money, make sure you are in the strongest negotiating position possible. Price is only one element in the negotiations, and it’s not necessarily the most important one. Other terms, such as the strength of the buyer or the closing date, are critical to a seller.
Some Realtors recommend that buyers get “pre-qualified” by a lender. This means the buyer spends a few minutes on the phone with a lender who asks a few questions. Based on the answers, the lender pronounces the buyer “pre-qualified” and issues a certificate that he or she can show to a seller. Sellers know that such certificates are not worth much, because none of the information has been verified. The buyer can have financial issues such as judgments, alimony payments, and banking information not surface in the “pre-qualification” process.
The way to make the strongest offer is to get “pre-approved.” This happens after all pertinent financial information for the buyer has been checked and verified. The buyer is actually approved for the loan and the only loose end is the appraisal on the property. This process can take from a few days to a few weeks, depending on your situation. Pre-approval is a very powerful negotiation tool, recommended for all buyers.
2. Sell Your Property First, Then Buy the House
If you have a house to sell, sell it before selecting a house to buy. A contingency sales isn’t nearly as strong as one that comes in with a ready, willing and able buyer. Consider this scenario: You’ve found the perfect house; now you have to make an offer to the seller. You want the seller to reduce the price and wait until you sell your house. The seller figures this is a risky deal, since he might pass up a buyer who doesn’t have to sell a house to buy his. He agrees to the contingency but only (if he’s smart) at the full price. You will pay more for the house than you should because of the contingency, and you will have to sell your own house in a rush. To get the house you want, you might have to take a lower offer than if you had more time. Buying a house before selling yours might cost you thousands of dollars.
3. Do Your Homework
Before house-hunting, make a wish list of things you want in your new home. Then make a list of the things you don’t want. You can use the lists as guides to rate each property 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.
If you’re concerned that there is not a house on the market for you, then go on a window-shopping trip. Browse our website using our search function to help you identify potential houses and locations without falling in love with a specific house.
When listing your own house, 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 a new home. If you don’t find anything to your liking, you don’t have to sell your present home.
As you shop for a home, keep in mind the difference between style and substance. Things of substance cannot be changed, such as the location, view, size of the lot, noise in the area, school district and floor plan. Elements of style can easily be changed: carpet, wallpaper, color, and window coverings. Buy the house with good substance; style can always be changed to match your tastes. Hint: imagine each house as if it were vacant; don’t consider the seller’s decorating skills and furnishings.
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.
Don’t forget to do an internet search of the school districts in the area you’re considering, for information on class sizes, percentage of students that go on to college, SAT scores, etc. The busing system can also tell you what schools particular house addresses are zoned for.
5. Stop Calling Ads: Get a Buyer’s Agent
Be careful when reading real estate ads. Remember that the person writing the ad is representing the seller, not you . Some homes have drawbacks that aren’t mentioned in the ad, such as traffic noise, power lines, or litigation in the area. The most important thing you can do is have someone on your side looking out for your interests. Pick an agent you feel most comfortable with and enlist the services of that agent as a buyer’s agent. Then you’re no longer a shopper; you are a client with all the rights, benefits, and privileges of an agency relationship. Almost always, the seller is paying your agent’s commission, and it costs you nothing to have someone on your side working for you.