5 Powerful Buying Strategies
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, 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.
2. 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.
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. 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.
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. 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.
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, 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 having 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 with him.
