Here are a few of my favorite key ingredients to a success strategy in buying real estate.
GET “PRE-APPROVED”
Do you want to get the best house you can for the least amount of money?
If so (and who doesn’t), 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 things, such as the strength of the buyer or the closing date are critical to a seller.
Just as in years past, I always recommended that buyers get “pre-approved” by a lender. This means that all of your financial information has been checked and verified by a quality mortgage lender. You are actually approved for the loan with a fixed purchase price or range 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, so you need to get started immediately and not wait until you’ve found your dream home.
SELL FIRST, THEN BUY
If you have a house to sell, sell it before you select a house to buy.
I’ve rarely seen a contingent sale work in the last few years, unless it’s with a new home builder who has other houses to sell and can afford to put one on a contingency.
Imagine this scenario. We go house hunting, find the perfect house, and 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 (if he’s willing to consider it even at all), 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. And to add insult to injury, you have to sell your existing house in a hurry and maybe take an offer that’s lower than you could get. Otherwise you lose your dream house.
Here’s the cold, cruel reality: buying before selling might cost you tens of thousands of dollars.
MAKE A LIST AND STICK TO IT
Before house hunting, make a list of the several things you want in the new place.
Then make a list of the several things you don’t want.
I’ll be glad to make copies of the list and we can use this list as a scorecard to rate and evaluate each property that we see. The one with the biggest score wins!
Many buyers do this informally, but I like the scorecards because they help avoid confusion and keep things in perspective when you’re comparing dozens of homes.
SEPARATE THE “SKIN’ FROM THE “BONES”
When house hunting, I want you to 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, floor plan, etc.
The “skin” represents easily changed surface finishes like carpet, wallpaper, color, countertops, and window coverings.
Buy the house with good bones, because the skin can always be changed to match your tastes.
SHOP UNTIL IT FEELS LIKE YOU’VE SEEN ENOUGH
I will show you everything available that meets your requirements.
In doing so, I highly recommend that you don’t make a decision on a house until you feel that you’ve seen enough to pick the best one. The average for my most recent sales has been about eight homes.
And before you ask, you can’t really effectively see more than three homes in a day. Even if you take good notes and the listing agents provide detailed property sheets, your memory will play tricks on you if you try to get an encyclopedic overview of the entire local market in a day.
By the way, if you have kids under six to bring along, that number drops to about two homes before their distraction may cause you to miss key features.
MAKE AN OFFER ACCORDING TO TODAY’S MARKET
In the late 1980’s, homes were selling quickly, usually a few days after listing. In that kind of market, we always advised our clients to make an offer on the spot if they liked the house. That was good advice at the time.
Today, in spite of what the listing agent will tell you, there isn’t always this urgency, and unless a home is kissy perfect, under priced, rare or has extremely desirable “bones” you have some time to think things over and compare with your lists of “wants” and “don’t wants”. If it’s one of those truly rare offerings, you’ll know it (you know what I’m talking about) and I’ll tell you not to wait and you’ll believe me.
DON’T WAIT TOO LONG TO ACT ON A HOUSE YOU LOVE
While you don’t want to be impulsive, being overly cautious can cause you to miss out on the house you want. Also, remember that there’s no law saying that the right house for you can’t be one of the first ones you see.
WORK WITH A REALTOR WHO IS CAPABLE AND WITH WHOM YOU GET ALONG
You want a skilled realtor, but you also have to feel some level of comfort and connection with them. If you’re not comfortable with your agent, seek out another realtor.
DON’T SKIP THE INSPECTION PROCESS
This is your only opportunity to have an expert point out any structural, mechanical, safety or environmental problems before you buy your house. (See my FAQ for Buyers for more details about the inspection process)
DON’T BUY A HOME THAT YOU WILL HAVE TROUBLE SELLING WHEN YOU EVENTUALLY MOVE
Sometimes a house has some very unique features or a setting that many buyers might find undesirable, so the seller sets a “bargain” price. Although it may be a good deal now, that bargain may be your headache in a few years.
“CAVEAT EMPTOR” (Latin for “Let the buyer beware”)
Don’t be afraid to ask questions and investigate the neighborhood around the house you’re looking at. You want to know if there’s a kennel on the block behind your backyard that you can’t see, but you’ll surely hear all summer. Having a Buyer’s Agent helps tremendously with this, since our priority is to help you rather than working for the seller.
DON’T BUY THE MOST EXPENSIVE HOME ON THE STREET
You want a house on a street where many of the houses are fairly comparable.
WHEN YOU FIND THE HOUSE YOU LOVE, PUT IN A REASONABLE FIRST OFFER
Negotiation is common and even expected, but you don’t want your first bid to be so low that the seller may be offended (although your buyer agent will know exactly how low depending on the current market conditions) and it could create an adversarial situation. However, your agent has to put in any offer you want to make, just don’t expect a big level of success without reason.
If you like this you’ll like Mike Hunter, the House Hunter as your Realtor even better.
Friendly, approachable and an expert on Metrowest Boston real estate. Specializing in Sudbury for 20 years. He knows the Sudbury market and has represented many happy Sudbury households to buy or sell. Please feel free to forward his profile to others you feel would benefit from his services.
Call Mike 978-580-1069 today.
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Mike Hunter … expert Metrowest Boston real estate advice and simple results-driven transactions
