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,
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.
