"5 Things You Must Absolutely, Positively Know Before You Buy A Home"

Real Estate Agent with Century 21 Allstars

•1.      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. 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, we've always recommended buyers get "pre-qualified" 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 "pre-qualified" 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!  Problems I've seen include recorded judgments, child support payments due, glitches on the credit report due to any number of reasons both accurate and inaccurate and 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 and the only loose end is the appraisal on the property. This process takes anywhere from a few minutes to a few days depending on your situation. It's VERY POWERFUL and a weapon we recommend all our clients have in their negotiating arsenal.

•2.     Sell First, Then Buy

If you have a house to sell, sell it before selecting a house to buy! We haven't seen many 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. 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 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 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

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 AND NONE OF THAT". You can use this list as a scorecard to rate each property 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 AND 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. We 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.  Don't Be Pushed Into Just Any House

Your agent should show you everything available that meets your requirements.  Don't make a decision on a house until you feel you've seen enough to pick the best one. Go to the Multiple Listing Web site with your agent to make sure you are getting a COMPLETE list of homes for sale and not just the home that the agent wants to show you.

In the late 1980's, homes were selling quickly, usually 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. That was good advice at the time.  Today, there usually isn't this urgency unless a home is drastically under priced, and you'll know if it is.  But keep in mind, if you wait too long, there is always a chance of the house selling before your offer is submitted to the seller. If you really like a house, get an offer written and make sure your agent includes the appropriate clauses to get you out of the offer, should the need arise.

Don't forget to check the SCHOOL DISTRICTS of the area you're considering.  Information is available on every school: class sizes, % 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 - agents create ads solely to make the phone ring! Many of the homes have some drawback not mentioned in the ad, such as traffic noise, power lines or litigation in the community. What's not mentioned in the ad is usually more important than what is. For this reason, be very careful when reading ads. Remember, the person writing the ad is representing the seller, 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 an eye toward how well it meets your needs and will point out any drawbacks you should know about.

So, whether you decide to work with us or not, pick an agent you feel comfortable with and enlist the services of that agent as a buyer's broker. Then you become a client with all the rights, benefits and privileges created by this agency relationship, and you're no longer just a shopper.  Did you know 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, who do you think he's going to call? His client, for whom he has a legal obligation to work hard, or someone who just called and said "keep your eyes open for me"? To get the best buy on a property, we always recommend you hire your own agent and stick with him or her.

Comments (4)

Mike Jones
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) - Tucson, AZ
Mike Jones NMLS 223495


This means that you spend a few minutes on the phone with a lender who asks you a few questions.

Most of what you have to say here is right on, but when I prequalify a client for one of my valued REALTORS, here's what they can expect I've done for the buyer they sent to me:

  1. I've talked with them about their objective.  (Primary, secondary, rental property)
  2. I've pulled their credit.
  3. I've found out where they work, and for how long.
  4. I know, based on my conversation with them, how much they're comfortable spending on the mortgage each month.
  5. I've reviewed with them how much house that will buy.
  6. I have a completed 1003 in my loan origination system, and I've emailed (as pdf) them a GFE and TIL.
  7. I've emailed the referring realtor a Loan Status Report verifying the buyer's competence to perform.

You just need the right lender relationship.  :)

Mike in Tucson

Nov 05, 2009 08:21 PM
Mike Jones
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) - Tucson, AZ
Mike Jones NMLS 223495

...and WELCOME to Active Rain!!  This is a fantastic community of professionals.

Nov 05, 2009 08:22 PM
Gabrielle Kamahele Rhind
KGC Properties LLC, Tucson Property Management & Real Estate - Tucson, AZ

GOOD MORNING MARIO!  Great tips -- and welcome to Active Rain!  I particularly like "sell your home first"! It's a big one in this market! -- Gabrielle

Nov 05, 2009 08:55 PM