Give away your negotiating power
- Can you imagine trying to negotiate a good price for your client when the seller or seller’s agent already knows your buyer has already emotionally bought the home?
- If you are looking at a home with the seller or his agent present, don’t ever let them know that the home is perfect for you. Best thing to do is to unemotionally look at the home and when back in the car away from earshot of others, express your interest in the home.
Buy the best home on the block.
- Almost without exception, the best home in a given neighborhood doesn’t appreciate as fast as the average home does. If most sales on a given street are around $700,000 most buyers can’t see why they should spend $850,000 for the top of the line home.
- If this is a first home, be aware that you are likely to want a bigger/better home in a few years and you definitely don’t want to loose pace with the market in terms of appreciation.
Over Improve Your Home
- This goes along with the previous item. If you just bought that great home for $700,000 and then you spend $75,000 on a new kitchen, $35,000 for a sweet master bath complete with marble shower and multiple shower heads, and then add a $50,000 backyard remodel with outdoor kitchen and flagstone, don’t expect to turn around and sell the home for $860,000 just because you spent that much fixing it up.
Buy a Problem
- Many times you can find a great deal by finding a run down home that needs some TLC. But, if you aren’t prepared financially or have the time and experience, you may be biting off more than you can chew.
- Even if you are good at fixing up a home, you can’t change its location. Getting a good deal because a home is near railroad tracks, has a commercial or industrial establishment as an immediate neighbor or is on a busy street means you will always have these things keeping the home’s value down.
Buying the most you qualify for, not the most you can afford
- OK, you have found a lender that will qualify you for a loan to buy that $1,000,000 home and you are so excited. You need to stop and think for a moment. Payments of $4000 a month may mean that you can barely eat, can’t buy that new car, will never take a decent vacation, have to turn the furnace off in winter because you can’t afford to heat your home and you can no longer afford heath insurance.
- Make sure you have a reasonable budget for your lifestyle and the home payments fit within this budget. Stretching is one thing but being a slave to your house payments at the cost of enjoying your life isn’t a good idea.
Don’t Try to Understanding Your Loan
- Do you know what loan points are? How about prepayment clauses? How much your lenders fees are and what they are for? Do you know your credit score and how it affects your loan? Do you know how to raise your credit score legally and quickly in order to qualify for a better home loan?
- The choice of which lender to use is more than just getting the best sounding rate and you should take the time to really understand the loan process.
Picking a real estate agent at random.
- It always surprises me that a home seller will often spend weeks researching different Realtors, interview them and only after they are comfortable with their choice, will hire an agent to represent them and then buyers will meet an agent at an open house, or a party or randomly walk into a real estate office and will start using an agent without a second thought.
- Your choice of an agent when buying a home is just as important as your choice when selling a home. Do your homework.
Don’t Pay Attention to the Real Estate Market
- Do you know if the market is going up or down? Do you know what the trend is? Is it slowing down or getting hot? What strategy you use in buying a home is very dependent on the market conditions. Not having the right strategy can cost you a lot of money.
Overbid when faced with Multiple offers
- It’s easy to get caught up in the momentum and frenzy of buying a home when the market is very active. Multiple offers are sometimes the norm and buyers may get carried away with offering more than they should.
- If you are in an active market and there are multiple offers, make sure you have worked out a strategy and price that you are willing to pay and stick to it. Buyer’s remorse often happens a few months later when the market has cooled some and a buyer realizes they paid too much for their home.
Don’t be creative when preparing an offer
- It’s amazing to me how often a buyer can position their offer for acceptance with a lower price by making sure that other conditions are met. Does the seller want a quick close? Can you offer a quick removal of contingencies? How about putting your full down payment into escrow as your deposit to show that you are serious?
- There are a number of strategies that can help you get your offer accepted at a lower price. Use a Realtor who has creative ideas and you can save money.