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.
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.
Put aside your emotions and think logically. This is likely the biggest purchase of
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/
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?
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 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.
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.
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.
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Have you started house hunting? What challenges and experiences have you had along the way? Leave a comment below.