Getting the Best Deal on a Home Getting the best deal on a home in any market Most people equate getting the best deal with getting the lowest price or “taking advantage of the seller”. This is not what this article is about nor should it be your goal in buying a family home! For the purposes of this article getting the best deal is getting the home you desire, for a fair (to great) price. Many people won’t like hearing this, but getting the best deal requires WORK on the part of the buyer. In this article I have attempted to break the buying tasks down into simple steps that can be worked through sequentially. Step 1: What do you Need and Want in a home? Many people start to look for a new home by looking to see what is “out here” without ever thinking about their needs and wants. Take some time to analyze your current housing situation. What do you currently have in a home, what are your real needs, and then what you desire in a home? Don’t forget to include location, especially if you are a commuter. Refer to the Home Needs Worksheet for a planning tool. The worksheet helps to clarify your ideal home criteria. When finished you should have a much clearer idea of what your housing needs and wants are. This information will be very important later when working with a Realtor. Step 2: What can you afford? Start collecting pay stubs, bill, receipts, check book registers. Complete the Home Expenses Worksheet, add other expenses if you have some not listed. Also complete the Maximum Mortgage Payment Worksheet. This will give you the maximum amount you can budget for a mortgage payment. Now start calling lenders to get their current rates and closing costs. Closing costs are very important, if you are short on ready cash, closing costs can be a deal breaker. After you have shopped around for a great mortgage rate and have found 1 to 3 lenders whom you feel comfortable with make an appointment and visit them. Ask questions, but don’t let them run a credit report just yet. You are interviewing lenders to fine one that you are most comfortable with. Step 3: Preapproval – Pick your best candidate lender and let that one perform a credit check and preapprove you. The lender will be able to advise you on what your maximum loan amounts and payment could be and any problems with credit that need to be corrected. Before proceeding, be sure to get a letter of preapproval, on the lenders letterhead, including lenders contact information. This is going to be necessary during the contract negotiation steps. Note: If you are a cash buyer get a “proof-of-funds” letter from you financial institution. Step 4: Budget Analysis – Now that you know what your may house payments could be, your monthly expenses, and your income, you are all set to determine what price range home you can afford. Remember when working on this budget don’t shortchange savings and extra cash for entertainment. A great home is very nice but you still need money to decorate and personalize the home, as well as enjoy your life in your new home. Refer to Home Expenses Worksheet. Step 5: Choose a Realtor. This is very important. You are looking for a Realtor that not only can search for homes (which all can) but one that understands your unique situation, wants and desires. You want a Realtor that will advise you honestly, one that is not afraid to tell you no or advise you against making a particular offer if he/she feels its not in your best interests. You need a Realtor that will give you personal attention and quickly earn your trust. You are not a commission check; you are an individual with specific needs and wants. How to find such a Realtor, the best recommendations come from friends and family that have worked with a particular Realtor; however, even then you must interview the Realtor. Meet face to face and discuss your needs and wants. Do you feel comfortable with the Realtor, do they seem interested in you or do they just want to start looking. Remember, up to this point you have done your homework, you know what you need and want, you are preapproved; don’t drop the ball now and work with a Realtor whom you don’t feel comfortable with. What tools will the Realtor offer you to help you search for homes? Remember, you are unique and so is each Realtor, keep looking until you find one that you are very comfortable with, then work only with that Realtor. You will be glad you did. Step 6: The Search, now the fun begins: Share all of your information, including budget analysis with your Realtor. Show them how you differentiated your needs from wants. This is important to the Realtor, as it helps them to better search for homes that meet your criteria. Talk with them about where you work and your commute. This is especially important if you are moving into new area, and you are unfamiliar with the traffic patterns. The Realtor can then advise you on locations that best suit your needs. Your Realtor, will start the search and get back to you with a list of possible properties. Your Realtor will schedule a viewing of selected properties with you, often within a few days. This first viewing is important to the Realtor and you. Of course you are looking at homes in your affordability range; it also gives the Realtor and you the opportunity to refine your search criteria. Often things that were never though of become important issues, it’s good to discover them early in the search so adjustment to your search criteria can be made. Step 7: You found one! A home comes on the market that meets all of your needs; the price is good based on you budget, and based on a CMA (Comparative Market Analysis) that your Realtor has prepared for you. Here is where all of your preparation pays off. You have thought through all your wants, needs and what you can afford. Your decision is now easy to make; you are ready to negotiate! Hesitation at this point can make all the difference between getting a great deal or just an average deal. Every Realtor can tell stories about buyers who hesitated for a day or two, on a great deal, only to come back to find the home already under contract. Remember, all buyers are looking for a great deal but not many buyers are as prepared financially or psychologically as you. At this point you and your Realtor prepare the contract and the Realtor presents it to the seller. The seller can accept your offer or make a counter-offer. If a counter offer is made the original contract is no longer valid (on the table). You can accept or reject the counter-offer. You are free to make a new offer or walk away. In either case you will be able to make your decision based upon the facts you acquired during the early steps of this process. No matter what the outcome, you can feel comfortable with your decision. |