1. Don't Get "Pre-Qualified!" Get "Pre-Approved"
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,
we 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! Unknown problems can surface for example:
recorded judgments, child support payments due, glitches on
the credit report (due to any number of reasons both accurately
and inaccurately), down payment funds 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 we recommend all of our clients
have in their negotiating arsenal.
2. Sell First, Then Buy
If you have a house to sell, sell it before selecting a house
to buy! 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.
We 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.
3. 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. We 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.
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. Review
the Multiple Listing printout 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.
5. 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, we 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 us 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, we always
recommend that you hire your own agent and stick with him
or her.
Katherine Prinzivalli, Realtor
Coldwell Banker Coon & McCreary
(925) 331-4133
E-Mail:
kprinzi@coldwellbanker.com |
