5 Secrets to Buying the Best House for Your Money
1. Get “Pre-Approved” – Not “Pre-Qualified!”
Getting the best property you can for the least amount of money requires that you put yourself in the best possible position to negotiate. Contrary to popular belief, price is only one element in the negotiating process. Compared to other crucial terms, such as the strength of the buyer or the length of escrow, price may not even be the most important factor.
In years past, I have encouraged buyers to get “pre-qualified” by a lender. This process entails a brief telephone interview with a lender, who will pronounce you “pre-qualified” based on your answers to a few questions, then provide you with a certificate that you can show to sellers.
|These days, sellers give very little credence to such certificates. Some even consider them WORTHLESS! Why? None of the information has been verified by the lender!In many cases, previously unknown problems can surface, including past judgments, alimony payments due, glitches on the credit report (both accurate and inaccurate, for any number of reasons), down payments that have not been in the clients' bank account long enough, and a number of other issues.The strongest buyers today get “pre-approved.” This happens AFTER the information provided to a lender has been verified. At this point, you are actually APPROVED for the loan. The only loose end is the appraisal on the property, which can take anywhere from a few days to a few weeks, depending on your situation. Pre-approval is a VERY POWERFUL weapon that I recommend all of my clients have in their arsenal, as a pre-APPROVAL will put you in a much more desirable position at the negotiating table.|
2. Sell your old home first, then make a deal on a new one.
If you have a house to sell, finish the sale on it before selecting a home to buy. A contingency buyer isn't nearly as appealing as 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 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 agrees to the contingency deal, but only with a full-price offer! You have now paid more for the house than you would have without the contingency, and you have to sell your existing house in a hurry! So, to sell quickly, you might take an offer that is much lower than what you might get if you had more time. The bottom line: Buying before selling could cost you THOUSANDS of dollars!
If you're concerned that there is not a house on the market for you, do some window-shopping before you put your house up for sale. You can identify desirable homes and locations without narrowing in on a specific house and potentially getting a less-than-stellar deal on it. If you feel confident that you can find a home after some brief looking, then put your house on the market.
Another tactic is to make the sale of your existing home “subject to seller finding suitable housing.” Adding this stipulation to the listing means that WHEN YOU DO FIND A BUYER, you will have a reasonable amount of time to find a new home without pressure. If you don't find anything that suits you, then you are not obligated to sell your home.
3. Add up the pros and cons.
When preparing to house hunt, make two lists: one list of things you want in the new place, and another of things you absolutely don't want. Take your lists along when you visit a property or open house, and use them to rate each home you see. The one with the most positives wins! This will help you to avoid confusion, jog your memory, and keep things in perspective when you're comparing dozens of homes.
In considering the different aspects of a home, you will want to learn and recognize the difference between STYLE and SUBSTANCE. SUBSTANCE is a set of things that cannot be changed, such as location, view, size of lot, noise in the area, school district, and floor plan. STYLE represents surface and aesthetic elements that can be changed, like carpet, wallpaper, colors, and window coverings. It is wiser to buy a house with SUBSTANCE, because the STYLE can always be changed to match your tastes. I always recommend that buyers imagine each house as if it were vacant, evaluating the home on its own merit, not on the seller's decorating skills.
4. Don't be pressured into buying any home.
Don't make a decision on a house until you feel that you've seen enough homes to choose the one that best suits your needs and desires. Your agent should represent your interests, showing you everything available that meets your criteria. If you’re not fully confident in the purchase, keep looking.
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. For the time and the market climate then, that was good advice. That same sense of urgency is not always present today, unless a home is drastically under-priced. If that is the case, you'll know it.
Don't forget to check into the SCHOOL DISTRICTS in the area you're considering. A wealth of information is available on every school. This will include class sizes, the percentage of students that go on to college, SAT scores, and more. Our team will assist you in easily obtaining school information for Tampa Bay area.
5. Stop calling newspaper ads!
Newspaper and internet ads are sometimes created just to make the phone ring! In fact, the homes featured in these ads likely have some drawback that's not mentioned up front, such as traffic noise, power lines, or litigation in the community. Things that are intentionally left out of an ad are usually more important than what is there.
For this reason, please, please be very careful when reading and responding to ads. Remember, the person writing the ad is representing the seller, NOT you! The most beneficial thing you can do is to enlist the help of someone who will look out for your best interests. Your own agent will critique the property, noting how well it meets (or does not meet) your needs. He or she will point out any drawbacks that you should know about. Whether you decide to work with the Lance Mohr team or not, choose an agent that you trust to represent you as a buyer’s broker. Doing so affords you all of the rights, benefits, and privileges of a relationship with an agent, and you're no longer just a shopper. Did you know that many homes are sold WITHOUT A “FOR SALE” SIGN ever going up, and WITHOUT EVER BEING LISTED in the paper? When an agent hears of a great buy, who is he going to call? His client, of course, to whom he has a legal obligation to work hard. To get the best deal you can, I always recommend that you hire your own agent and stick with him or her.
I would sincerely like to help you with all of your real estate needs. My extensive knowledge of real estate investing, 1031 exchanges, and all aspects of home construction and sales can save you THOUSANDS of dollars and HOURS of time when buying a home. Please do not hesitate to give me a call.