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! Oftentimes-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 its 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 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, 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
size, percent of students that go on to college, SAT scores,
etc. You can get this information from your agent, directly
from the school, or this website.
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 that 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, 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.
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