Scope Out The Scene
When you look at a home during a Sunday afternoon open house everyone is on their best behavior, including neighbors, pets and drivers. Take a look at the home and neighborhood during off hours, including early morning and evening/night hours to see what is really going on. You also want to test the home’s commute to and from work during morning and evening rush hour traffic. Everybody is on a leisurely stroll on a Sunday afternoon but it all changes come Monday morning.
How Low Can You Go?
When making an initial offer don’t start off with a low-ball bid. Negotiations rarely start well when you offend the other party on the offset. Come in with a reasonable starting price and be prepared to show the seller comparable sales data to back up your offer if it is significantly lower than their asking price. When negotiating price, remember most people tend to respond with a price in the middle, so choose your numbers wisely.
The Doctor Is In
Give the house a physical – in terms of inspections. Once in contract you want the home to get a clean bill of health. There are numerous inspections you can elect to have done which will identify any large issues you may run across in the future. Smart sellers may have already done some inspections on the home prior to listing it and will share those with you. It may be wise to get your own anyway, just in case the original inspector missed something.
This is not Match.com
You are buying a home, not dating it. So take things slow and don’t fall in love with the home before closing escrow. When you act on emotion you tend to overpay or make concessions you normally wouldn’t. Make rational decisions based on data and not emotion. Save the honeymoon for after the close of escrow.
Wait, Nobody Told Me!
When you pay rent, it's one flat fee. Pretty simple to manage. When you are paying a mortgage, there’s the mortgage payment. Then other stuff you maybe didn’t know about or forgot about. Stuff like property taxes, insurance, HOA dues, utilities, assessments and repairs. Budget ahead for these items and you will never have to say “Nobody ever told me!”
Bigger Is(n’t) Always Better
One of the soundest pieces of advice you will hear from a seasoned real estate investor is “Don’t ever buy the biggest and best house on the block”. It’s tempting to have a cooler house than everyone else on the street but financially, unless you are getting at a steal, it’s not a good investment. Smaller houses generally are easier to resell, maintain, and usually appreciate more. Plus smaller houses always sell for a higher price per square foot than the McMansions.
Put Your Pre-Approval Where Your Mouth Is
If you want to be taken seriously, you better show you are serious about being qualified to buy. Real estate agents see it all the time; buyers “aren’t serious” and are just looking so they won't commit to getting a loan approval. But then, wham! In their face is their dream home, but they can’t make an offer. Getting a pre-approval doesn’t cost anything, and you don’t have to use it. But when the time comes that you need to, it’s waiting by your side.
You’re Not a Fortune Teller
… and you don’t have a crystal ball. Don’t try to time the market. Buy a home based on when you are ready and able to. Many people get lucky (and unlucky) with timing the market, but remember, equity is irrelevant until it’s actually cashed out. Buy a home when it’s the right time to buy for you and your family.
You’re So Money And You Don’t Even Know It!
Prior to getting approved for a loan, stop buying things. Like larger purchase items. This can completely destroy your loan and your chances for getting that house. Lenders generally will run a final credit check before funding your loan, so if you have racked up debt with a new car, iPod, suit, or whatever, you can kiss the house bye-bye as it will throw off your debt-to-income ratios. Wait until you close escrow, then get the goods.