Powerful Buying Strategies
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 meant spending a few minutes on the phone with a lender who asked a few questions. Based on the answers, the lender pronounced you "pre-qualified" and issued a certificate to show to a seller. Since then, sellers have become aware that such certificates are WORTHLESS, because none of the information has been verified!
Some of the problems that are found during verification include: recorded judgments, alimony payments due, credit report problems, and unseasoned down payments (those that have not been in the clients' bank account long enough to satisfy the lender).
So the way to make the strongest offer today is to get "pre-approved." This happens AFTER all information has been verified. The 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! Offers with contingencies on selling a house aren't nearly as strong as ones that come in with a ready, willing and able buyer. Consider this scenario: You've found the perfect house - now you
make an offer to the seller. You want the seller to reduce his price and wait until you sell your house. The seller considers this to be too risky, he might be passing up a new buyer who DOESN'T have to sell a house.
Thus, if he agrees to your contingency, he insists on receiving full price. So, you have now paid more for the house than you would have without the contingency, and you have to sell your existing house in a hurry or you lose the house! So you accept an offer that's lower than if you had 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 a suitable
replacement." 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 removes some of the emotion from the decision and helps to keep things in perspective when you're comparing many homes.
When house hunting, remember to keep in mind the difference between "STYLE AND SUBSTANCE." the location, view, size of lot, noise, school district, and floor plan. STYLE represents easily-changed finishes such as carpeting, wallpaper, paint colors, and window coverings. Buy the house with good SUBSTANCE, because you can change the rest in time, and try to not be taken by 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.
Recently, 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. Today, there isn't always this urgency, so unless a home is drastically underpriced, and you'll know if it is, take some time. Don't forget to check into the SCHOOL DISTRICT. Information is available on every school; such as class
sizes, percentage of students that go on to college, SAT scores, etc.
Please be very careful when reading ads. Remember that the writer represents the seller, not you. The most important thing you can do is have someone on your side looking out for your interests. 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. You will then receive his/her legal obligation to work hard for you.
5. What are some tips on negotiation?
The more you know about a seller's motivation, the stronger a negotiating position you are in. For example, seller who must move quickly due to a job transfer may be amenable to a lower price with a speedy escrow. Other so-called "motivated sellers" include people going through a divorce or who have already purchased another home. Remember, that the listing price is what the seller would like to receive but is not necessarily what they will settle for. Before making an offer, check the recent sales prices of comparable homes in the neighborhood to see how the seller's asking price stacks up.
Some experts discourage making deliberate low-ball offers. While such an offer can be presented, it can also sour the sellers and discourage them from negotiating at all.
6. Do sellers have to disclose the terms of other offers?
Sellers are not legally obligated to disclose the terms of other offers to prospective buyers but are allowed to do so by law.