5 powerful buying strategies
5 powerful buying strategies
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! Often times-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
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. Go to the Multiple Listing
computer with your agent to make sure that you are getting a COMPLETE
list. In the late 1980's, 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 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
Claude THOMAS, Realtor©