July 31, 2014 - If you’ve been out looking for homes, you probably have realized it’s a seller’s market right now … there aren’t enough homes for all the potential buyers. Buyers are scrambling to preview homes and put in offers, sometimes above the asking price, in a very short time frame (picture "The Amazing Race").
So now is the time to ask yourself this question: Am I an attractive buyer? If you were up against 10 other buyers for a home, would you be able to stand out? To help you answer "yes" to these questions, here are some important steps to follow:
- Make sure your credit score is accurate. Also, avoid taking on any large debt for the few months before you purchase a home. It could have a negative impact on your credit score.
- Get pre-approved. Pre-approval is the process of completing a loan application and allowing your mortgage loan officer to review and verify the information you provided, along with assuring your credit scores are in an acceptable range for your mortgage product. Why is this so important? Sellers want the assurance you are "credit worthy" to purchase their property. Most real estate agents today will require their buyers to go through the pre-approval process before they begin showing homes to you. They, too, want buyers to be in a strong position to make an offer on the home of their dreams.
- Know exactly what you want and need. What are you looking for in a neighborhood? What amenities in a house do you need and want? What is your maximum purchase price? Also, how much of a downpayment will you provide – the higher the downpayment, the more attractive you are as a buyer.
- And what you’re willing to concede, if necessary. If you end up head-to-head with another buyer, there may be things beyond price that are on the bargaining table. Did you include items in your offer such as "seller must paint walls" or "seller must upgrade kitchen appliances?" Concessions may be necessary if you really want the home.
- Do your research. What are homes selling for in the neighborhoods you want to browse? Attend open houses to get a feel for what amenities are common in homes within your price range. How much does it cost to carpet a room, paint a room, purchase a new refrigerator – in case you will need to make some improvements on the home or want to ask the seller to make them.
- Get personal, if necessary. Consider the following scenario – You have an accepted offer and are planning to move when the seller gets cold feet and says he isn’t sure he wants to sell anymore. He has raised his children in this home and is having a hard time letting go. You write a personal letter to the seller explaining how you would take good care of the home and raise your own kids in it. It works and the seller follows through with the deal.
Your real estate agent and mortgage loan professional will help you through the home buying process. With some prep work (and sometimes a little luck), you can purchase the home of your dreams!