Armed & Ready: 5 Winning Home Buyer Tips

In today’s competitive market, home buyers ready to start house hunting often find themselves competing against each other over and over again. This is certainly the case in the $150K-$250K price range.

So, before you start house hunting, there are certain strategies and tips you can employ that will put you ahead of the pack.

Armed & Ready

Before you begin your house hunting in earnest, get all of your preliminary due diligence with a lender completed ahead of time. A word of caution here, be careful, there are so many internet lenders out there ready and willing to spit out a pre-approval to first time home buyers.

What often happens is you get a house under contract and then the lender begins to dig through your finances only to find that there’s a glitch or some kind of restriction that prevents them from funding your purchase. Now you’ve wasted valuable time and likely paid for a home inspection on a house you suddenly have no financing for.

Don’t fall prey to these guys! Make sure your lender has all the required paperwork, taxes, etc., ahead of time so that when you find the house of your dreams, your lender can assure the seller that your financing is rock solid and quickly move you forward towards closing.

Work with a local lender that is well known and has a solid reputation within the industry. Realtors are a valuable asset in that they’ve seen the good, bad and ugly of lenders. Your Realtor can direct you to reputable lenders that will get the job done.

Up the Earnest Money (EMD)

Earnest money is also referred to as “Good Faith” money. It’s money a home buyer is willing to put up front and it’s held by their Realtor’s brokerage in an escrow account. At closing, that money is then credited to you, the home buyer.

How much earnest money you are willing to put down is a good indication to the seller of your serious commitment to the purchase and your ability to pay for it. When in a multiple offer situation, you’ll want to make a better impression, so consider including a $3,000 to $5,000 EMD in your purchase offer.

If you lose the bid or something really bad shows up during the home inspection period, the money is returned to you. That’s already law in most states. However, before you sign a Mutual Release, make sure your Realtor has stipulated that 100% EMD is returned to the purchaser for good measure.

Skip The Competition

One of the biggest mistakes I see home buyers make is to get caught up in the heat of the moment when in a multiple offer situation.  I go into some more detail regarding multiple bids in my blog, “Cat Fight! Buyers Forced To Bid On Multiple Homes“. 

It’s tempting to go in well above asking price just to “win” the competition, but you’ll soon regret that choice down the road when your lender refuses to fund the purchase well after you’ve paid $300+ for a home inspection. Now you’ve wasted valuable time and money.

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Put aside your emotions and think logically. This is likely the biggest purchase of ones life and one that will revisit you daily for the next ten or more years to come. Struggling to make your mortgage payments will quickly drain you of your “moment of victory”.

Your first criteria when searching for a new home should be to look for the one that meets nearly all of your basic criteria including the number of rooms, layout, exterior features and most of all…location.

Shop Older Listings

The first two weeks of any listing are the hottest. It’s during that time that home buyers will descend on the property and if it’s a new remodel and/or  in a great location, the seller will receive multiple offers.  The longer the house is on the market, the better your chances.  

A Common Scenario that plays out is a buyer will go in high and win the day. However, after inspection, something goes wrong or the buyer has a change of heart (most likely saw another property he/she likes better). If the Realtor is diligent, he/she will contact the other buyers who submitted offers previously. However, this is often not the case. I write about just such a scenario experienced by one of my clients and how I secured his purchase in spite of the listing agent. Read “He Lost The Bid, But Still Won The House!“.

When the house goes on the market again and the initial frenzy is gone. Some sell again quickly but many do not experience another multiple offer scenario again.

Expect compromises along the way, it’s unavoidable! Why pay through the nose for a shiny remodel when you can save thousands and replace the carpet and paint the rooms yourself?

Eliminate Contingencies

Don’t shoot your offer in the foot right out of the gate. The last thing you’ll want to do when competing for a property is to make a bunch of demands from the seller.

Contingencies are basically demanded of the seller. For instance, asking the seller to pitch in towards your closing costs, pay for a home warranty, cover a six month’s worth of HOA fees, etc. In a competitive situation, a purchase offer with no contingencies places you in a stronger position.

Patience & Timing Can Win The Day

Last Summer, I was working with a lovely young couple trying to juggle their wedding and find a home to purchase on a limited budget in Livonia and Westland, MI. The competition was just too fierce and they lost bid after bid.

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By the end of August, I suggested they take a break, concentrate on their upcoming wedding and begin again in early winter months when the home buying frenzy is most likely to slow down.

In November we were at it again and this time we quickly found a wonderful starter home just 15 minutes from their jobs. They secured it without any competition and closed on it in January.

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One Final Tip

The best way to approach a seller is to demonstrate your willingness to work with them. In other words, be flexible! This is often overlooked by home buyers.

Before you submit your purchase offer, ask your Realtor to talk to the Seller’s agent and find out what their main concerns are.  It’s not always price but quite often timing to find and secure a new home for themselves. You can then tailor your purchase offer accordingly to demonstrate your willingness to work with them.

Also, check out “My Top 3 Home Buyer Strategies” for more great tips.

Leave A Comment

Have you started house hunting? What challenges and experiences have you had along the way? Leave a comment below. 

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10 Responses

  1. Lok Which says:

    Thanks for this information.I enjoyed reading through this post.it is an awesome article.I told a friend before we entered this new year that this year I want to go into home buying and he was like he knew nothing about it he advised me to searched and haven’t seen any post up to what I really want until I found this.Thanks.

    • admin says:

      Hi Lok,

      Yes, now is a very good time to buy your home, interest rates are still well below what your parents paid years ago and all indications are that there will be more to choose from this year. I live and work in Southeast Michigan and cover Livingston, Oakland and Washtenaw counties as well as a few others nearby. Let me know if you’re in my neck of the woods. Also, please feel free to share this post. I really do appreciate your comments. 🙂

  2. Isobel says:

    Wow! I didn’t know there are so much things need to be aware when comes to buying a house until I read your article! I was previously struggling in selecting a strategic location as I have no idea where to start from. Thanks for your article! It’s definitely a helpful guidance to avoid mistake while searching for a house. 

    • admin says:

      Hi Isabel, Thanks for taking some time to comment. I work as a full-time Realtor in and around Livingston County, MI so if you’re in my neck of the woods, let me know. If not, I’d strongly urge you to search out an experienced Realtor who can help guide you through the whole process. Remember, the valuable services provided by a Buyer’s agent are paid for by the Seller of the property, not the buyer. Good luck in your home search. 

  3. Andrew G says:

    I guess I needed a better understanding of this topic today as I am wondering why I lost money on some of these inspections that did not pan out well in Florida. This must be the cost to do so in the state. I gladly understand better though the competitive factor in home buying under a normal market. The thing is though that the homes down here have mostly been out bid by investors creating little opportunities for home buyers

    • admin says:

      Hmm, I’m also a real estate investor. My husband and I own and operate 9 income properties in three different states. Typically, it’s the investor who loses out to the home buyer. Investors typically want to buy as low as possible to protect their ROI. Over the last 18-24 months, the lack of inventory forced homebuyers to compete against each other over and over again. We saw a lot of that here in Michigan as well. If you don’t like competing, consider buying before the Spring/Summer market hits.  Either way, the good news is, all indications are you will start seeing more houses on the market for sale this year 2019. 

  4. fyre says:

    I wish my friends would have read your armed & ready section of your article.  You are so right and it can dave a lot of hassle and heartache in the long run!

    You shouldn’t start off in a new sanctuary with a lot of miscommunications and fear looming when you don’t have all your ducks in a row, so to speak.

    Patience, kindness & timing really does win the day!

    • admin says:

      Fyre, 

      Timing is such an important factor. After all, moving all your possessions from one place to another is no small matter. It’s typically first-time home buyers who are the most impatient and can easily grow discouraged. I often tell them, “better to wait for what you really want” than to settle for anything less. After all, the purchase of a home is typically our largest purchase. Please feel free to share this blog. Much appreciated!

  5. Taetske says:

    Good afternoon,

    I find your advice in this post really good but at the moment I am thinking of selling my place. It is getting too big which includes a big garden so in total too much work. As I am a bit older, 68 to be precise, I have experienced both, the buying and selling of a home. 

    My experience is that when you are interested in buying a house you need to make a payment of at least 5% of the price. For really expensive places 3 % will do. If you then do not buy it in the end that money is lost. Call it compensation for the house owner who takes the property off the market and waits for 2 months.

    Here we have the same system for rental contracts, the norme being 1 month pay and like that you buy some time.

    I know by experience that flexibility is asked for on both sides.

    I do have a question. What is your experience. A furnished house sells better than empty? 

    Regards, Taetske

    • admin says:

      Taetske,

      Yes, most definitely. A furnished home will always sell quicker than a vacant home, provided that the furniture is in good condition and not too old (less than 10 years). My advice would be to clean and declutter everywhere. Start with your closets then move on to each room one by one. Place boxes out of sight (in a corner of your garage, basement or other storage area). Also, fresh paint and carpet go a long way. Most buyers hate the thought to removing wall paper and won’t want to deal with it. 

      When a buyer walks into your house, they are looking for reasons “not to buy”. As a seller, your main goal is to remove as many objections in a buyers mind as possible. A clean, uncluttered and well cared for home will always sell.

      I have articles that pertain to sellers and selling, so check them out. Let me know if I can be of any help.

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