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5 Buying Strategies I Always
Recommend
1. DON’T GET “PREQUALIFIED”!
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, I always recommended that buyers get “prequalified” 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 “prequalified” 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! Often unknown problems surface! Some of the problems I’ve seen
include recorded judgments, child support payments, accurate and inaccurate glitches on
the credit report due to any number of reasons, down payments 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, the only loose end is the appraisal on the property you want to buy. 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. DON’T BUY ANYTHING ON CREDIT!
Please check with your lender before you buy anything on credit or apply for ANY credit.
In most cases you can buy the same car, furniture, vacation, etc. after you buy your home.
BUT, if you buy it before the close of escrow you may significantly impact your ability to
buy your new home.
At today’s interest rates, a new monthly debt of $70 could reduce your purchase price
by $10,000. A new lease on a car for $350 per month could drop your buying power by
$50,000. Depending on your price point, that could be a significant difference in the
homes that are available for you.
Applying for credit other than your home loan could take you out of your desired price
range or even completely eliminate your chances at a quality loan. Lenders look at how
many credit checks you have had in the last 6 to 12 months. More than 2 and you could be
in trouble. That includes cell phones and “no payment till anytime” deals.
Refuse offers to increase existing credit lines. Pay off and close accounts with finance
companies if possible-they are viewed negatively. Maintain at least one of your oldest
cards to show a long credit history.
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. I call this “NINE OF THIS & 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 & 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. SELL FIRST, THEN BUY.
If you have a house to sell, let me
help you sell it before selecting a house to buy! I have seen few contingent sales work in
the last 3 years, unless it’s with a new home builder who has other houses to sell
and can afford to put one on a contingency.
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. I always recommend that you sell first, then buy.
If you’re concerned that there’s not a house out there for you, then let’s
do a little window shopping. We can identify possible houses and location 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 your new home. If you don’t find anything to your liking, you don’t
have to sell your present home. This strategy can make your home less desirable to both
buyers and agents because they are not sure when you will find the new home.
5. STOP CALLING ADS!
Whether you decide to work with me or not, pick an agent you feel comfortable with and
stay with that agent if he or she is doing the job. Agents work on commission and are paid
by the seller, NOT THE BUYER! I charge NOTHING for my time when I work for you. To get
100% effort from me, I have to know that you value and appreciate my work on your behalf.
Get your own personal representation by using a Buyers Brokers Agreement. It is your right
to have your own representation when buying a home. You do not have the same
representation when using the sellers agent to buy the house. If you see a sign or an ad
that interests you, call me and I can get all the information for you. I can get
information for you on any property you are interested in: homes, condos, new development
homes & condos (contractors require that I accompany you the 1st time you visit),
mobile homes, land, leases, FSBO’s (for sale by owner), apartments, income property,
commercial and industrial property.
How I help you get your dream home. I have a program called PBS for Preferred Buyers
Search. It is a program for those people who are serious about buying a property now. We
get you pre-approved with a lender so you have the bargaining power of a cash buyer. Then
I program your parameters into the PBS Program and search the MLS computerized listings on
a daily basis so you can be one of the first people to know when a property comes on the
market.
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 their agent. When the agent hears of a great buy, who is the first person he
is going to call? The client WHO IS COMMITTED TO HIM, not someone who just called on an
ad. So to get the best buy on a property, choose an agent and stick with him.
Dennis & Sunshine Smith
Taylor Place Real Estate, Home of the
HomeBase® Real Estate Advantage
2564 Carlsbad Blvd. Carlsbad, CA 92008
Office: 760-436-0087
Fax: 760-436-0996
Toll Free: 888-668-9053 |
