Winning Home Buying Strategies and Secrets from Industry Insiders
Thinking about buying a home? Since it’s likely the single biggest investment you will ever make, being prepared will help you make a smarter purchase decision. Don’t make an offer until you read and understand these real estate insider tips.
Know your buying power
What is buying power? It is the combination of how much you can realistically pay for a home and your credit-worthiness. You’ll need money saved for the down payment -- which is typically between 10% - 20% of the price -- as well as cash for closing costs, such as transfer tax, PMI, title insurance, and legal fees. For ongoing mortgage and maintenance, your monthly obligation shouldn’t be more than 36% of your monthly gross income.
A good credit score is usually 720 or above. A loan professional can help you figure out your buying power and give you a clearer idea of if your score is in the ‘good’ range. Have them check your score for you so that you don’t inadvertently lower your score by checking it yourself. You want to clean up your credit as soon as you can, and definitely before you get a mortgage pre-approval.
Do you have a home to sell before buying? Submitting an offer contingent on the sale of your home lowers your buying power. You may not find a seller willing to wait or you may pay more than you could have with a stronger negotiations position. Find out if you are able to carry both mortgages in the event you find a home you love and don't want to risk losing it.
Don’t try to time the market
Even within a city’s limits, there can be micro markets that are increasing or decreasing in value. A knowledgeable buyer’s agent can provide you with a buyer’s market analysis report, outlining which neighborhoods are still up and coming -- with potential for increased property value -- versus those that have peaked with inflated home prices.
There’s never a perfect time to buy a home, even if you’re in a hot market. It can take a while to know what you like, and you may need to see 10 or more houses before you decide. Another good reason to be patient: you might find a better deal. Look for expired listings, which may offer more price flexibility and accept a lower-than-list offer. FSBO (for sale by owner) listings tend to be overpriced -- so make sure you are represented by an agent that is a Certified Negotiations Expert to get the best price.
Be ready to make a stand-out offer
If you love it, make the offer. Otherwise, that dream home may disappear faster than you think, and especially if you’re buying in a hot market. Have your buying agent contact the listing agent before you submit an offer so that they can decide what’s important to include in the offer. If you’re serious about putting in an offer, you want to increase the chances that it’s accepted.
Show that you’re serious about the purchase by creating a buyer’s offer packet. It should include your lender’s preapproval letter, a screenshot of your down payment money in your bank account, and comps that support the rationalization of the offer you are presenting. In some cases, writing a passionate letter to the sellers can influence their decision depending on their love for the home.
Once you’ve completed the negotiation process, have the home inspection conducted as early as possible. It's the biggest hurtle to overcome during due dilligence and if there are any major issues, you can negotiate with the seller to repair them before closing, offer cash back or lower the price. The sooner this is completed in the process, the sooner you can feel better about waiting until all conditions are met or you can move on to find another. You'll have to decide if minor issues that you can repair on your own is worth negotiating. Once you re-open negotiations, the seller will have opportunity to walk away from the deal if they choose to.
Work with a professional for insider exclusives
If you’re thinking about buying a home soon, or even in the near future, let me know the details. I may have just what you’re looking for in an exclusive listing not available to the general public - so get in touch today!
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