5
Secrets to Buying the Best House for Your Money
1. Get
"Pre-Approved" - Not "Pre-Qualified!"
Do you want to
get the best property you can for the least amount of money? Then
make sure you are in the strongest negotiating position possible.
Price is only one element 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!
Many times
unknown problems can come to the surface! Some of the problems
I've seen include recorded judgments, alimony 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 the strongest 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 Your
Property First, Then Buy the House
If you have a
house to sell, sell it before selecting a house to buy!
Contingency sales aren't nearly as strong as one that comes in
with a ready, willing and able buyer. Consider this scenario
You've found the perfect house - 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 this is 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! You have now paid more for the house than you could have
because of the contingency, and you have to sell your existing
house in a hurry! Otherwise you lose the 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
THOUSANDS of dollars.
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 things you want in the new place. Then
make a list of the things you don't want. You can use this list as
a guide 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 "STYLE AND
SUBSTANCE". The SUBSTANCE are things that cannot be changed
such as the location, view, size of lot, noise in the area, school
district, and floor plan. The STYLE represents easily changed
surface finishes like carpet, wallpaper, color, and window
coverings. Buy the house with good SUBSTANCE, because the STYLE
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. A decade ago, 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 underpriced, 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 this web site.
5. Be prepared to act fast!
The biggest
mistake I see home buyers make is they find something they really
like, ask to see other homes, and by the time they decide their
first choice was right, the home is gone. In a seller's market,
there aren't enough homes to satisfy every homebuyer. Prices are
usually sky high because of the low inventory. Homebuyers
typically make a fast offer - often for more than the list price -
or risk losing the home to a more agile homebuyer. There isn't
much room to negotiate in a seller's market unless the property is
overpriced. Your agent should show you everything available that
meets your requirements. If you see something you like and can
afford, buy it. Inexperienced or not, in today's market you must
be willing to act fast.
Thanks for visiting!
Excellent
Service, Outstanding Results!
Oleg Potemkin (RA) Hawaii Realty
Associates, LLC
4211 Waialae Avenue,
Suite 1020, Honolulu, Hawaii 96816 USA
Direct: (808) 398-9987 Fax:
(808) 538-8081 E-mail: oleg@hawaii-realty.com
