* Don't Get "Pre-Qualified!
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. Priceis only one bargaining chip in the negotiations, and not necessarily themost important one. Often other terms, such as the strength of the buyer orthe length of escrow, are critical to a seller. In years past, I alwaysrecommended that buyers get "pre-qualified" by a lender. This means thatyou spend a few minutes on the phone with a lender who asks you a fewquestions. Based on the answers, the lender pronounces you "pre-qualified"and issues a certificate that you can show to a seller. Sellers are awarethat such certificates are WORTHLESS, and here's why! None of theinformation has been verified! Oftentimes-unknown problems surface! Some ofthe problems I've seen include recorded judgments, child support paymentsdue, glitches on the credit report due to any number of reasons bothaccurately and inaccurately, down payments that have not been in theclients' bank account long enough, etc. So the way to make a strong offertoday is to get "pre-approved". This happens AFTER all information has beenchecked and verified. You are actually APPROVED for the loan and the onlyloose end is the appraisal on the property. This process takes anywhere froma few days to a few weeks depending on your situation. It's VERY POWERFULand a weapon I recommend all my clients have in their negotiating arsenal.
* Sell First, Then Buy
If you have a house to sell, sell it before selecting a house to buy! Ihaven't seen a contingent sale work in the last 3 years, unless it's with anew home builder who has other houses to sell and can afford to put one on acontingency. Let's pretend that we go out looking for the perfect house foryou. We find it and you love it! Now you have to go make an offer to theseller. You want the seller to reduce the price and wait until you sell yourhouse. The seller figures that's a risky deal, since he might pass up abuyer who DOESN'T have to sell a house while he's waiting for you. So hesays OK, he'll do the contingency but it has to be a full price offer! Soyou see, you paid more for the house than you could have because of thecontingency. 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 anoffer that's lower than if you had more time. The bottom line is that buyingbefore selling might cost you TENS OF THOUSANDS of dollars. I alwaysrecommend that you sell first, then buy. If you're concerned that there isnot a house on the market for you, then go on a window-shopping trip. Youcan identify possible houses and locations without falling in love with aspecific house. If you feel confident after that then put your house on themarket. Another tactic is to make the sale "subject to seller findingsuitable housing". Adding this phrase to the listing means that WHEN YOU DOFIND A BUYER, you will have some time to find the new place. If you don'tfind anything to your liking, you don't have to sell your present home.
* 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 OFTHIS AND NONE OF THAT". You can use this list as a scorecard to rate eachproperty that you see. The one with the biggest score wins! This helps avoidconfusion and keeps things in perspective when you're comparing dozens ofhomes. When house hunting, keep in mind the difference between "SKIN ANDBONES". 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. TheSKIN represents easily changed surface finishes like carpet, wallpaper,color, and window coverings. Buy the house with good BONES, because the SKINcan always be changed to match your tastes. I always recommend that youimagine each house as if it were vacant. Consider each house on itsunderlying merits, not the seller's decorating skills.
* Don't Be Pushed Into Any House
Your agent should show you everything available that meets yourrequirements. Don't make a decision on a house until you feel that you'veseen enough to pick the best one. Go to the Multiple Listing computer withyour agent to make sure that you are getting a COMPLETE list. In the late1980's, homes were selling quickly, usually a few days after listing. Inthat kind of market, agents advised their clients to make an offer ON THESPOT if they liked the house. That was good advice at the time. Today thereisn't always this urgency, unless a home is drastically under priced, andyou'll know if it is. Don't forget to check into the SCHOOL DISTRICTS ofthe area you're considering. Information is available on every school; suchas class sizes, % of students that go on to college, SAT scores, etc. Youcan get this information from your agent or directly from the school.
* Stop Calling Ads!
A word of caution - agents create ads solely to make the phone ring! Many ofthe homes have some drawback that's not mentioned in the ad, such as trafficnoise, power lines, or litigation in the community. What's not mentioned inthe ad is usually more important than what is. For this reason, I want youto be very careful when reading ads. Remember that the person writing the adis representing the seller and not you! The most important thing you can dois have someone on your side looking out for your best interests. Your ownagent will critique the property with an eye towards how well it meets yourneeds and will point out any drawbacks you should know about. So whetheryou decide to work with me or not, pick an agent you feel comfortable withand enlist the services of that agent as a buyer's broker. Then you become aclient with all the rights, benefits, and privileges created by this agencyrelationship, and you're no longer just a shopper. Did you know that manyhomes are sold WITHOUT A SIGN ever going up or an AD EVER BEING PUT IN THEPAPER? These "great deals" go to those people who are committed to workingwith one agent. When an agent hears of a great buy, who do you think he'sgoing to call? His client, who he has a legal obligation to work hard foryou, or someone who just called on the phone and said "keep your eyes open"?So to get the best buy on a property, I always recommend that you hire your own agent and stick with him.