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 "prequalified" 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 "prequalified" 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 unknown problems surface! Some of the problems I've seen include recorded judgments, child support payments, accurate and inaccurate glitches on the credit report due to any number of reasons, 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, the only loose end is the appraisal on the property you want to buy. 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.
DON'T BUY ANYTHING ON CREDIT!
Please check with your lender before you buy anything on credit or apply for ANY credit. In most cases you can buy the same car, furniture, vacation, etc. after you buy your home. BUT, if you buy it before the close of escrow, you may significantly impact your ability to buy your new home.
At today's interest rates, a new monthly debt of $70 could reduce your purchase price by $10,000. A new lease on a car fro $350 per month could drop your buying power by $50,000. Depending on your price point, that could be a significant difference in the homes that are available to you.
Applying for credit other than your home loan could take you out of your desired price range or even completely eliminate your chances at a quality loan. Lenders look at how many credit checks you have had in the last 6 to 12 months. More than 2 and you could be in trouble. That includes cell phones and "no payment till anytime" deals. Refuse offers to increase existing credit lines. Pay off and close accounts with finance companies if possible-they are viewed negatively. Maintain at least on of your oldest cards to show a long credit history.
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 & 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 & 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.
SELL FIRST, THEN BUY.
If you have a house to sell, let me help you sell it before selectinga house to buy! I have seen few contingent sales work in the last few 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's not a house out there for you, then let's do a little window shopping. We 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.
STOP CALLING ADS!
Whether you decide to work with me or not, pick an agent you feel comfortable with and stay with that agent if he or she is doing the job. Agents work on commission and are paid by the seller, NOT THE BUYER! I charge NOTHING for my time when I work for you. The only thing I ask is that you value and appreciate my work on your behalf. I can work for you as a traditional agent (commonly known as a seller's agent) or as your Buyer's Agent. That choice will be yours. I'll explain it to you when we meet. If you see a sign or an ad for a house that interests you, call me and I can get all the information for you. I can get information for you on any property you are interested in: homes, condos, new construction, for sale by owners (FSBO's), rentals, income property, commercial and industrial property.
How I help you get your dream home. I have a program called PBS for Preferred Buyers Search. It is a program for those people who are serious about buying a property now. We get you pre-approved with a lender so you have the bargaining power of a cash buyer. Then I program your parameters in the PBS Program and search the MLS computerized listings on a daily basis so you can be one of the first people to know when a proprty comes on the market.
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 their agent. When the agent hears of a great buy, who is the first person he/she is going to call? The client WHO IS COMMITTED TO HIM/HER, not someone who just called on an ad. So to get the best buy on a propoerty, choose an agent and stick with him/her.
Oh, by the way, if you know of, or talk to, a friend or relative who is considering buying or selling Real Estate, please let me know so I can offer them the same valuable service I give to you.
Welcome to the adventure of buying a home. If you want an experienced professional on your side,
Geri Sonkin RE/MAX Hearthstone 516-457-7103
Reprinted with permission of Dennis & Sunshine Smith
Geri Sonkin