You want to buy and they want to sell. Perfect, right? Well it would be perfect if there were only the two parties in the equation. We’re gearing up for the peak selling seasons and if you’re in the market to buy, you will have a lot of other competition out there making it so your dream home slips right through your fingers at the last minute.
The last thing you want to have happen is taking the time to tour a home, deciding that it’s the one for you, and being outbid, or unprepared to make an aggressive offer. So how can you be prepared in a seller’s market? How can you woo the seller? What do you have to do to beat out the competition and, like a TV dating reality show, win the ultimate prize, leaving the other competitors in the dust? Here are 3 ways that you can’t afford to miss out on to be a good home buyer.
1. Be Preapproved
Being preapproved is not the same as being prequalified. The difference is simple—when you’re prequalified the lender asks you a few questions and estimates what they think you might qualify for. This, however, is only an approximation. Preapproval involves more steps, but gives you a more realistic idea of what you can spend on a home. The lender will ask for documents verifying your pay, your other debts, etc. Basically prequalification is based on word-of-mouth estimations, and preapproval is verified and much more formal. Your lending specialist can help you with the details, so make an appointment before you go home hunting so everything is in order for you to make an offer when the time is right.
2. Do Research Beforehand
Before you go house hunting you want to take some time to analyze the neighborhood, know other home values in the vicinity, and compare properties so you can act immediately when you tour the home. If you’ve done your research well enough, you could even have an offer ready before you tour the house to put on the table as soon as possible. Remember, in a competitive market timing is key, and you won’t have time to dilly-dally around making a decision. By then the house might be gone and you’ll be out hunting again. So doing your homework will help you understand the home’s value and feel more comfortable acting quickly.
You’ll need to enlist the help of a qualified real estate agent to do this. Ask your agent to run comparables on the home and crunch the numbers. Get to know the area yourself by taking a drive and seeing what the other homes are like and what amenities are close. Don’t rely on sites like Zillow to give you correct real estate values as they are notorious for using outdated information that is grossly inaccurate.
3. Write a Really Attractive Offer
Basically this means that you’ll need to be prepared to offer more than asking price so you’re meeting or beating the sellers on their list price. This will make your offer stand out from the crowd of others who are looking for a “good deal” but aren’t offering what the home is worth. Also, don’t ask for contingencies in the offer (like requesting the seller pay the closing costs, asking for extended closing dates, or wanting to sell your house first). Contingencies can muddy the water in a competitive market and put you behind the pack of bidders.
Another way to write an attractive offer is to create open lines of communication—have your REALTOR call theirs to see when they actually want to move (it may be next week, but it could be longer than that). That way you can cater your offer towards their needs by knowing what the seller is looking for.
By following these three tips—being preapproved, doing your research, and writing an awesome offer—you’ll be much more prepared than many of the other folks out there looking for a home. Happy bidding!
Nice newsletter. Good article. Good information. Thank you. Carol
For conventional financing, borrowers with scores at 740 or anywhere above generally receive the same loan pricing (rate and cost). That being said, the better your credit the higher your chances of receiving loan approval with high debt to income (up to 50%) or high loan to value (up to 95%) which can be a major benefit when applying for a new loan. For Jumbo financing, borrowers with credit scores above 800 are generally rewarded with both better pricing and easier guidelines. There are no situations where better credit is a negative when obtaining new financing so we should all continue to strive to reach and then stay in the 800’s.
What are the advantages of a score over 800
Thank you Mike for this information. As a residential realtor the information that you provide is crucial to a successful transaction for my clients. You are indeed a pleasure to recommend to all of my clients. You are so professional, thorough, conscientious and pleasant to work with. !!
Hi Dane! Wanted to make sure I'm clear on this. Am I right in saying that on whichever remodel is done you still take a loss rather than an increase in value - the ROI will never exceed 100% of cost?