STRATEGIES TO HOME BUYING
When the time comes to make an offer on a home, your goal should be to make it your best and as attractive as possible to the seller. But before you make an offer, there are several things you should know to help increase your chances of getting the home you want, instead of losing it to another buyer. These tips and strategies will put you in the best possible position among other home buyers to help give you a contractual advantage by presenting a solid commitment and more desirable offer to the seller.
CREATE A HOUSE FUND As a buyer, you should have an additional 4% of the purchase price to cover closing costs, on top of the money you plan to spend decorating and furnishing your home and your lender’s required down payment. Plus, you should have ample earnest money set aside to offer as part of your contract. Earnest money is discussed in greater detail below.
GET APPROVED Don’t get “pre-qualified” for a loan. Instead, get “pre-approved”. A certificate of pre-qualification is worthless to a seller. Spending a few minutes on the telephone with a lender who asks you a few questions and then pronounces you as pre-qualified is not the same as pre-approved. You are not pre-approved until the information you provided can be verified. Having a pre-approval letter to submit with your contract offer states you’re ready and serious. Know your maximum loan approval before making an offer so you can be prepared to counteroffer. Know what type of loan you want and what your lender will require as a down payment.
HOME INSPECTIONS and INSURANCE Have a home inspector and insurance agent lined up. Do your homework and find out who you want to work with during contract negotiations so you don’t find yourself scrambling and settling for the first inspector and insurance agent you talk to. Your Realtor® might have a few referrals to give you, but keep in mind, your agent cannot warranty or guarantee an inspector’s work or experience. A real estate agent should never require you to use one inspector or insurance agent over another.
“The best homes go quick, so be prepared to be one of the first to see it!”.
KEEP IN CONTACT Stay in close contact with your Realtor by giving them continual feedback concerning your desires and needs. Let them know what you like and don’t like about houses you’ve seen. Ask your real estate agent to set you up to receive automated email listings; this will help you see the new listings as soon as they come on the market. Also, let them know your schedule and where you’ll be and how to reach you when necessary.
BE READY Be ready to make a decision. Spend lots of time in advance deciding what you must have so you won’t be unsure when you have a chance to make an offer. When you see a new listing that fits your needs, be ready to go see it as soon as it comes on the market. The best homes go quick, so be prepared to be one of the first to see it!
READ DISCLOSURES When you see a home you’d like make an offer on, become familiar with the Seller’s and Lead-Base Paint Disclosures that are available. This will help you become familiar with the home’s maintenance and repair history and protect you later if problems arise. This will also give you an idea of immediate repairs you will need to make after you close, if any.
BID COMPETITIVELY You may not want to start out offering the absolutely highest price you can afford, but at the same time, don’t try to low-ball either. If the house is a hot listing, you could lose it to a buyer who makes a better offer.
LIMIT YOUR CONTINGENCIES Keep contract contingencies to a minimum. Contractual restrictions such as selling your current home before closing on another, or prolonging your closing can make your offer less appealing compared to others. A two month closing after your initial offer is traditional, but closings can occur in as short as a few weeks.
EARNEST MONEY This is a commitment you make to the sellers that you are serious about your offer. Earnest money is somewhat like a deposit that is later applied to your closing costs. An escrow agent such as a title company or qualified real estate company will hold your earnest money until closing. The amount of your earnest money is traditionally 1% of the purchase price, however, you can offer more or less depending on your how certain you are about your decision. A strong contract offers sufficient earnest money and helps give you an advantage over other buyers. If the contract falls through due to no fault of your own, the earnest money is returned to you.
The tips and strategies outlined here are only guidelines. Each home purchase is unique, therefore, yours will be tailored to your needs. Chances are you will view several homes before making your decision. It can be stressful at times, but try to remain positive and enjoy finding your new home. Your Realtor should be available to help you through the entire process of home buying from showings to the day of closing…..just ask. ■
a real estate transaction, you should consult your attorney.