Now that it’s spring and house-hunting is under way, I wanted to give a few tips on how to handle your home-buying experience.
1) If you are in an area of rapid appreciation (due to limited supply…and pent-up demand) perhaps you should just do this one tip for right now: Sit this one out. That’s right. Screw it. Resign yourself to waiting for next winter, and see if things have calmed down by then. Take a nice vacation instead, or if you’re frugal, put more money towards paying off other things, such as cars, bills, etc. and put any leftover monies towards that future mortgage.
2) Still wanting to forge ahead…you’ve been doing all of the above already, and you are one of the lucky few to still be in a good position to buy? Alright then, first – please get pre-approved! This is different from merely getting qualified. This means not only are you pre-qualified, but you have begun the loan process, and are just waiting for the right home to come along. If you skip this very vital first step, you will not even make it to first base. Too many serious buyers are out there, and right now, this is a very serious game. Sellers want a real buyer, and will choose accordingly.
3) An interesting fact right now: there are a lot of cash buyers on the scene. Buyer’s from different countries are making moves into the U.S., the aging population are leaving inheritances, and there’s that one or two lucky lotto winners! Whatever the reason for it, it is happening a lot! I’ve not seen the latest stats – but I’m going to guess that over 50% of all real estate transactions are now cash sales! That’s O.K., a lot of these cash buyers are investors looking for rentals and the like, and so are not necessarily buying up all the inventory. Think beginner homes, and rentals. So tip number three then, is about being ready! What’s that mean? It means be pre-approved and be ready to jump when your Realtor says to! You can not say, “Can I see it tomorrow, or this weekend?” The answer is, NO, it will be gone by then. (In a Hot Market/area.)
4) Find a competent agent. They have to be a hustler. They have to know what you want. Right off the bat if you tell them you want only a single-story, and they just send over (usually via email) every listing, not paring it down to the select few, and they send over two-stories anyway…keep looking! If you notice that some homes are not showing up, and they are sold by the time your agent gets around to telling you about them…get a new agent! This person, right now, must look at the Multiple Listing Service all day long, every day. They must be as willing to jump to show you the listings, at lunch time, evenings, weekends, holidays, as you are. If not, the other hungry agent’s and their clients will beat you to the punch.
5) You’ve got your agent. You are pre-qualified. You are submitting offers…but not winning at the bidding wars. What to do? Is your agent supplying you with the comparable sales prices on each home you bid on? Is he/she advising you that you must meet the sales price, or better it to currently beat out other home buyer’s? Are you asking for too many things? You don’t ever, for instance, want to negotiate on any of the homes’ amenities that don’t normally come with the home…you may ask later for the fridge, fountain, etc. to stay (at a negotiated price!) but asking for them to be thrown in at the beginning will get you the worst response. Also, if you are pre-approved, you need to reflect that in your closing time. They might need more than 30 days to close the deal, and move on, but by asking for a shortened escrow period, you show them you are a willing and able buyer.
O.K., are you still thinking that it’s not that easy? Everyone thought that becoming a Realtor was the next best thing to panning for gold! Ha! Alright, you need more tips! That’s right, it’s been a real bitch to get anyone’s offers accepted these days, even cash buyers! So here’s a few more:
6) You’ve found the house! Write up the offer at the house, leave it in a sealed envelope, along with a quick note (and your pre-approved letter!) to the sellers that you love their house. (Yes, good idea to leave in discreet area away from other snoopy agents) If your agent tells you the house is worth full-price, and you know it is going to have a lot of offers, you can maybe safely stay close to over the asking price, at least to possibly net a counter-offer, if not an outright acceptance. It’s very hard for a Seller to get a full-price offer, and then say, hey, we really wanted more…and then be total hold-outs. So you can go over by a moderate amount, to show you really liked their house, without having to go too overboard! BUT, and it’s a big but…performed by butt-head Realtors everywhere, some are pricing their homes way too low to attract such a feeding frenzy! This agent is an idiot…and a lot of times, wants to control the listing, be able to sell it to his friends, family, etc..because you will come along, tell your Realtor, “Oh, wow! See deals still DO exist! Yeah, we will offer the $99K they are asking!” And your smart agent will tell you “–umm, he/she underpriced it because he/she is an idiot! This house is worth $220K!” But you won’t offer $220K, because you are convinced there is a good-deal fairy, and so you think about it, and offer $110K the next day, only to find out that Mr. Listing Agent, AKA butt-head, sold it to one of his flipper buddies, or drinking buddies, or whatever, for $210K! They got a deal and saved $10K…just because everyone else wasn’t even playing in the same game! (This is where I feel compelled to say I dislike a lot of Realtors; which is why I am now a writer 🙂 )
Are you really still reading? I don’t want to break this into 2-3 parts, so I’m going to keep going. Oh, you’ve heard all this before…and there must be more you can do besides throwing all you’ve got into buying that farm…and don’t forget…that can be a bad thing, when you’ve “bought the farm”. O.K., let’s go for more:
7) Those afore-mentioned hated Realtors are going to hate me right back for saying this one, but too bad…here you go: In a very heated market, where there are at least 10 offers on every good property, and you are missing out, no matter what your devoted, dogged, good-guy realtor can do for you…it’s time for a little change-up. You need more Realtors! Explain kindly to your Realtor that you have heard about listings only being held “in-house”…this means that Realtors, knowing they hold all the cards, are holding their listings back from ever having to go into MLS. This happens for a few reasons, and sometimes they are good ones. Sometimes they are just for bad ones. It all depends. Bad reasons: The Realtor just wants to double-end it. This means more $$$ for him/her. It also means that they again, provide listings only for themselves, and their own offices to share…and no other agent outside of that office can show it, much less sell it. They know that eventually you will wander over, abandon your Realtor who has been hunting for you for the last two years, on every weekend, rainy night, and even during his kid’s birthday party. Because you were desperate! It happens, I know…and the more that Brokerages experience this, the more they join in on this practice. It can be for good reasons, too though…as in, when it’s a fast market, my husband and I don’t feel it’s fair to charge a full 6% commission, especially if you are also going to buy from us as well. This way, we can lower our commission, but we have to exclude other agents, or else this plan does not save the Seller money. We sometimes already have a buyer, so that commission for another agent is not warranted. In any event, tell your Agent you need to just remain competitive, and you are going to work with other agent’s (in addition to him/her!) so you can be privy to everyone’s in-house listings. Be upfront and honest with everyone, that you will only offer on a property with an individual, if that property is not listed in the MLS. And that you already have a “family agent” but that if you can be shown something he/she hasn’t or can’t…then you will write it up with them. Please do be careful. (If you have signed a buyer’s agreement with any one particular agent for a certain time period, please do not violate this agreement, and continue working diligently with your agent!) If not, bring any address you see, a sign… first to the attention of your main agent, and ask them about the availability. If they can not show it to you, only then please proceed. Realtors, believe it or not, work very long hours, and for relatively low pay, after shared broker’s fees, our CAR/NAR/MLS/desk fees; our almost $4.00 a gallon gas fees as we cart clients around all day…and repetitive paperwork costs and valuable time as we write up offer after offer, to find you the best home possible! Well, I think I’ve hit most everything in regards to how to present offers in a hot market. If anything else comes to mind I’ll post a Part Two. Cheers, good luck, and happy house-hunting! (Information obtained whilst working as a Realtor past twenty-some odd years. My husband/partner (Cliff Lloyd) is still one of the best in town and can be hired at London Properties in Fresno, California @ WeWillSellTeam@yahoo.com.