Once you make the decision to buy a home, preparation becomes essential. If you live in an area with a hot real estate market preparation and understanding how to craft an offer can mean the difference between getting the home of your dreams and it going to another buyer.
The advice below will give you guidance on getting ready to buy a home before you start your search.
One step that many buyers miss is getting pre-approved for a loan. The experts at Flagship Financial Group note that buyers have nothing to lose and everything to gain with loan pre-approval.
For one, it won’t cost a penny, and it doesn’t commit you to using a lender. During the pre-approval process a lender simply looks at your basic financials and using that information determines the maximum amount you’d likely be approved for if you apply for a loan.
This will help you narrow your search to homes you can afford, and it tells sellers you should be able to buy a home up to the maximum. In a competitive market it could help you secure a contract because the seller will be less concerned about the loan falling through. You’ll also have an opportunity to talk with a lender to get a better idea of how much money you need for closing costs, down payment, etc.
Know Where You Want to Live
If you live in a sizable city with hundreds of homes on the market searching for the best one will be time-consuming and frustrating. Before you start looking for a home, decide exactly where you want to live. After all, real estate is all about location. You can change everything about a home except where it’s located.
Zero in on a specific region that you prefer. Next, identify three neighborhoods that are your top picks within the region. Focusing on specific neighborhoods helps to narrow your search so you don’t have to wade through hundreds of options that aren’t where you want to live. Being hyper-focused on activity within a few neighborhoods also helps ensure you’re among the first to know when a new home hits the market.
No home is going to be 100% exactly what you’re looking for. If you focus on finding a 100% home you’re going to miss great 90% homes that you can improve. This is another point that Flagship Financial says many buyers overlook.
Create a short list of three must-haves. These are the essentials that can’t be easily changed such as the number of bedrooms or bathrooms. Any home that is in your target area(s) and has those three must-haves is a serious contender worth considering. Now create another list with three nice-to-haves. If a home has one or more of the nice-to-haves as well you should think about putting in an offer.
This will help you stay focused on what matters most so you find homes that meet your needs, instead of passing them up because they aren’t perfect. Remember, everything but the location can be changed.
Put in an Offer That Will Get Accepted
The golden rule of real estate negotiations is to focus on a win-win situation. It’s understandable that you want to get the best deal possible on a home, but the seller also wants to get the best price possible. Homes are also very personal to people. Because of that, a low-ball offer can be seen as insulting to some sellers.
The best thing you can do before putting in an offer is look at a few comparables for the neighborhood. Comparables are similar homes that have sold in the neighborhood within the last six months. This will give you a better idea of home values in the area so you offer a fair price.
In some areas, particularly in the summer, it’s not uncommon to run into multiple offer situations. Depending on how much competition there is, a full price offer may not be enough to seal the deal. To make your offer stand out you can try:
- · Offering slightly above asking price. (Keep in mind the home will have to appraise for the offer price if you are getting a mortgage.)
- · Putting down a larger earnest money deposit.
- · Offering to pay the seller’s closing costs.
- · Being flexible with your closing date to accommodate the seller’s schedule.
- · Offering to buy the home “as is”. This doesn’t mean you won’t do an inspection. It means that after the inspection if you intend to move forward with the sale you won’t ask the seller to make fixes or improvements.
When you find yourself in a multiple offer situation it’s important to keep a level head. Many buyers get wrapped up in the idea of losing the home and act hastily. That’s when you’ll want to review your loan pre-approval and list of must-haves to decide if getting into a bidding war is really worth it.