Sell First, Then Buy
If you have to sell your house before purchasing a new one, don’t go house hunting until your current property is Under Contract. Let’s suppose you find the perfect home. You love it and make an offer, asking them to hold it for you while you try to sell your own house (a contingency offer). A wise Seller knows it’s a risk to possibly lose a different Buyer who doesn’t have a house to sell, so if he agrees to hold it for you for a limited time, he’ll want you to pay full asking price. You end up offering more than you might have because of the contingency.
Now your house is on the market and has to be sold quickly because you don’t want to lose your dream home. You either cut your asking price or accept an offer lower than what you might have if you’d had more time. These two scenarios might end up costing you tens of thousands of dollars.
If you’re concerned there won’t be a house you want when yours sells, look at a few places and identify possible locations and homes without falling in love. You might also add a phrase to a contract when someone offers on your current home that says something like, “Sale subject to Seller finding suitable housing,” but put a time limit on it.
Don’t Get Pre-Qualified
A Pre-Qualification letter is not worth the paper it’s written on. A Lender will take information you give them, run numbers, and let you know the likelihood of whether you might qualify for a loan, and for how much. Any Lender can issue a Pre-Qual letter within a few minutes, but no reputable Realtor will consider that a legitimate confirmation of your ability to purchase a home.
Rather, you should have a Pre-Approval letter from a credible Lender that shows your income and debt have been verified. During this process, many undisclosed problems (judgments, glitches on credit, seasoned money for a down payment, etc.) can be addressed so that when the time comes to make an offer, you can be in the strongest negotiating position possible. This process can take anywhere from a few days to a few weeks, depending on your particular situation. If you qualify, then documents you’ve provided will be verified and your loan can be ‘pre-approved.’ Don’t lose out on a home you want because you haven’t taken care of this important detail before you start looking.
Play the Game of Nines
Make a list of nine things you’d like in your new place, and a list of nine things you don’t want. Or put another way, Nine of This and None of That. Use this as a scorecard for each property you visit and it will cut down on the confusion as your brain tries to compare homes whose details you can’t necessarily remember. The houses with the highest scores rise to the top of your list, the ones with low scores can be discounted.
When looking for your new home, imagine the house you’re viewing as vacant. Look for its underlying merits, not the decorating skills of the current owner. Differentiate between skin and bones. Bones are things that can’t be changed – location, view, size of the lot, noise in the area, the school district, the floor plan, etc. Skin represents surface finishes that can be changed – carpet, wallpaper, paint, window coverings, countertops, etc. Buy the house with the good bones.
Make a Timely Decision
Home buying is seasonal in every area of the country. Not just with the changing seasons, but also with changing real estate markets. If it’s a season favorable to Buyers (a Buyer’s market), then there’s not as much of an urgency to make an immediate offer on a home you think you might like to own (unless a particular property is considerably underpriced). Don’t hesitate to ask your Realtor to show a house to you again, and even a third and fourth time if it’s going to help make your decision.
In a Seller’s market, you may have to make an offer on the spot, sometimes even offering more than asking price. If you’re working with a reputable, knowledgeable Realtor, let them guide you on current market trends. Don’t rush into buying before you’re sure it’s the house you want, but don’t lose out because you’re afraid to make a decision.
Stop Calling Ads!
If you’re planning on buying a house, I can’t emphasize strongly enough how important it is to work with a Buyer Agent. Find a Realtor you respect, one you trust can be your advocate in the legal maze of purchasing a home. As a Buyer, in most markets it’s FREE to use the services of a professional Real Estate Agent, someone who knows your specifications, your likes and dislikes, and who has immediate access to homes as they come on the market.
If you’re ‘chasing’ ads, they’re written by the Seller or the Seller’s agent, and many Buyers disclose too much information about themselves and their situation when they talk to someone who doesn’t have the Buyer’s best interest at heart. Feel free to pass on potential properties you find to your agent, but when it comes to interacting with the Seller or their representatives, let your Realtor speak for you.