Best Methods To Get The House You Want

Here is a quick outline that will help you become a successful home buyer. There may be other things that would help and other agents may have different strategies. These work well in my experience and specifically in today’s market.

Be Pre-approved. Not pre-qualified. Get your credit score pulled by a lender, supply them with all of the documentation they request and get a firm pre-approval. Talk to them about refreshing it if you don’t find a house within 45-60 days and how these subsequent pulls may or may not affect your credit rating, too. It’s alright (even preferred) to interview a few lenders before you sign on the dotted line. Like the commercial says, “Just Do It!” if you’re serious about buying a home. Note: If you’re primarily interested in foreclosures and the property will be your principal home, talk to the lender about rehab loans. Many foreclosures are not financeable in their current condition and will require either a cash offer or a rehabilitation loan.

 Commit to a Realtor. Again, interview a few. Realize that not many will invest a lot of time into you if you’re not pre-approved and serious. Once you commit, stick with them and be open if there are things you don’t like. Sometimes it will be their way of doing business, other times it will be the market dynamics and you’d experience with any agent.

 Get daily listing reports. New listings, listings that have dropped into your price range, houses back on the market. The good ones are going fast and you need to be ready to roll.

 Drive by the interesting ones within 24 hours. Don’t wait or you may get shut out or put yourself in a multiple offer situation. Be sure your agent will have time to get you into homes within 24 hours of your request.

 Don’t be afraid to pull the trigger. Once you see a home you’re interested in, write the offer. If you’re in the lower price ranges (under $200,000), you will possibly be only one of multiple offers. Being pre-approved gives you a step up over casual buyers. Write that offer fast.

 Don’t lowball. If it’s a total dump, that’s one thing, but if it’s habitable, write a realistic offer. After you’ve seen a number of properties you’ll have an idea of a fair price for the house and its condition. Lowball it and you’ll open the door for a competing offer.

 Be prepared to get pre-approved by a lender chosen by a bank if it’s a foreclosure. That’s not uncommon. You don’t have to use them for the loan, but they want to make sure you’re able to perform financially. This can take from a few hours to a couple of days.

 Have an inspector chosen. One way to make your offer more appealing is to stipulate a shorter inspection period, say 5 days from date of seller acceptance. Ten to fourteen days sounds a lot more like you’re playing games to a seller –especially if it’s a bank-owned property. Discuss with your agent the typical inspections for the area. Home, sure. Well and septic, maybe. Radon, perhaps. There could be others.

 Make a ‘real’ earnest money deposit. Don’t do the $500 gambit. Put down a minimum of $1,000. I recommend that you put down 2-3% of the offer price. If the offer doesn’t fly, you’ll get it back. If the inspection is bad, you’ll get it back. If all is well, that money is applied to your down payment and closing costs.

 

The key is to fill in as many blanks as possible before you even look at the first house. Put yourself in position to move quickly and definitively. It will reduce stress and let you focus more on making good decisions. If you’re looking for homes in my market areas, feel free to contact me for a no obligation discussion.

 

Winning at 'Highest and Best'

In my market areas, there's a shortage of supply in the under $150,000 price range. That means that most first time buyers are getting into multiple bid situations.  As both a listing and a selling agent, here's what I've seen.

First, sometimes the list price is artifically low. Maybe it's a short sale and that's the only way the seller could generate enough showings. Maybe it's a bank owned with a listing agent from 30 miles away and they're not familiar enough with the local market to price it a little higher. Or maybe the bank just wants to get it sold fast.

What I'm driving at is that the list price is not always the 'fair' market value. Usually we see that on the other end of the spectrum - where it's too high.  I've also seen $89,000 properties sell for $102,000 and $107,000 homes sell for $121,000 - and pretty recently. And that means they did appraise, folks.

I always counsel my buyers that we need to be ready to move fast. Strong pre-approval is number one.

Also, be ready to scurry to get a bank specified pre-approval. Wells Fargo and Bank of America do this all the time, as do many other foreclosure (REO) vendors. Your buyer can still use their lender of choice, but they better have their info ready for a quick bank pre-approval from another lender.

If you can get your offer accepted quickly you can eliminate the multiple offer scenario. But that's happening less and less.  Many banks don't allow ANY offers for the for the first seven days of a listing. Then it's open only to owner occupants for the next week, then it opens to investors.

I also suggest that you forget about the list price.  Do what you're supposed to do - a CMA on the property. Sure, you take into consideration its condition and its defects, but you need to establish a real value 'as is'.  In some cases your buyer may elect to surpass even that amount. Maybe it's convenient to family or commuting needs. Perhaps it's the school district they really want their child to attend. Perhaps it's an REO property in (gasp!) move-in condition.

Paying a little over fair market value isn't that big of a deal when you're looking at amortizing a loan over 30 years and IF this is the property they want the most. We all get into this lowest price mindset and lose sight of the bigger picture.

Make the terms as painless as possible. Be prepared to eliminate seller concessions towards closing costs if necessary to make your 'highest & best' more attractive. I've seen banks take a lower priced but more streamlined terms offer after they call for highest & best.  That's not the norm, of course, but it does happen.

I do quite well for my buyers on price and terms. But if they constantly lose house after house to superior bids, not so much. We've all worked with buyers that exhibit 'selective memory'. We still have to start from the very first meeting to establish how they will be successful in buying a new home with the least amount of stress, and to fully explain market dynamics.  That's why they chose us instead of another agent.