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5 Secrets to Buying the Best House for Your Money
by Unknown Author
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. Stop Calling Ads!
Please note - ads are sometimes created 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 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 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 or
her.
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