5 Powerful Buying Strategies

1. Forget About Being “Pre-Qualified” and be “Pre-Approved” Instead.

In order to get the most house for the least amount of money, you must maintain a strong negotiating position. 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 the past, much attention was mistakenly drawn to getting “pre-qualified” by a lender in order to save time. “Pre-qualification” generally requires a few minutes on the phone with a lender who asks you a few simple questions. Based on the answers, the lender pronounces you “pre-qualified” and issues a certificate that you can show to a seller. Such certification is now deemed WORTHLESS to sellers! This is why. Information given over the phone in a few minutes is not information that has been verified. Unforeseen problems and circumstances often surface. Recorded judgments, child support payments, glitches on the credit report due to a number of reasons, and down payments that have not been in the clients’ bank account long enough are all examples of information that is not reflected on a certificate for “pre-qualification”.

The way to make a strong offer today, instead, is to get “pre-approved”. This happens AFTER all information has been checked and verified. You are actually APPROVED for the loan 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. It’s an extremely important tool for securing a property that we recommend all our clients have in their negotiating arsenal.

2. Sell First, and Then Buy.

If you have a house to sell, do so before selecting a house to buy!  Rarely have we seen a contingent sale 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.

Suppose that we go out looking for the perfect house for you. We find it and you love it! Now, an offer must be made to the seller. You want the seller to reduce the price and wait until you sell your house. The seller, aware of the risk involved, worries that he may pass up another buyer, one who DOESN’T have to sell a house while he’s waiting for you. The seller says he will agree to the contingency, but only if you agree to full price. In this case, you pay more for the house than you would have because of the contingency.  Now you have to sell your existing house, and in a hurry! Otherwise you lose the dream house! In a slight panic to sell quickly, you might take an offer that’s lower than it would have been if you had more time. The bottom line is that buying before selling might cost you TENS OF THOUSANDS of dollars.

We always recommend that you sell first then buy. 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, in doing this, you feel a sense of confidence 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 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 When You Hunt.

Prior to house-hunting, you should make a list of nine things you want in the new place. Next, make a list of nine things you want to avoid. I call this “NINE OF THIS AND 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 you to avoid confusion and keeps things in perspective when you’re comparing dozens of homes.

Keep in mind, when you house-hunt, the difference between “SKIN AND BONES”. The BONES are things that cannot be changed such as the location, view, the size of the 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. We always recommend that you imagine each house as if it were vacant. Consider each house on its underlying merits, not on the seller’s decorating skills.

4. Don’t Be Pushed Into Just Any House.

Your agent should be able show you everything available that satisfies your specifications. Do not make a final decision on a house until you feel that you’ve seen enough to pick the one that best suits you. Go to the Multiple Listing computer with your agent to make sure that you are getting a COMPLETE list.

In the late 1980’s, homes were selling quickly, usually within 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. It was good advice at the time. Today, there isn’t always this urgency, unless a home is drastically under-priced… which you would immediately recognize.  If you have children, or plan to have children in the near future, don’t forget to check into the SCHOOL DISTRICTS of the area you’re considering buying in. Information is available on every school pertaining to things such as class sizes, percentage of students that go on to college, SAT scores, etc. You can get this information from your agent or directly from the school.

5. Stop Calling Ads!

A word of caution – some agents create ads solely to make the phone ring!  Many of the homes advertised have some type of drawback that isn’t mentioned in the ad, such as traffic noise, power lines, or litigation in the community.  What isn’t mentioned in the ad is usually more important than what is.  For this reason, please use much care when reading ads.  Remember that the person writing the ad is representing the seller and not you! The most important thing you can do is have someone on your side looking out for your best interests. Your own agent will critique the property with a careful eye geared towards how well it meets your needs. He will also be able to point out any drawbacks you should know about.

Whether or not you decide to work with us, be sure to pick an agent you feel comfortable with and enlist the services of that agent as a buyer’s broker. In doing so, you become a client with all the rights, benefits, and privileges created by this agency relationship, and you’re no longer just a shopper. You would be amazed to know how 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 one agent. When an agent hears of a great buy, he will take this information to someone he has already formed a working relationship with, not to just any random shopper that may or may not consider him as an agent. He has a legal obligation to work hard for a client. To get the best buy on a property, it is always a good decision to hire your own agent and stick with him.