How to be a GREAT Buyer
A couple weeks ago we talked about How to be a Great Seller, Buyers this one is for you.
It’s a tough market to be a Buyer. Historically low inventory, lots of competition, multiple offer situations that go tens (if not hundreds) of thousands of dollars over asking price.
But there are many things you can do to set yourself up correctly from the start and make the process far less stressful for you and everyone else.
Get fully pre-approved with a local lender.
This is critical. These days a seller will not even look at an offer from a buyer without a pre-approval letter or a proof of funds if they are paying cash. This means that you need to speak with the lender before you start shopping to confirm what you can afford. This is a huge benefit to you because it will make it easier to get your offer accepted and also make the process simpler as you go through to get your loan finalized. Your lender will request documentation like W-2s, 1099s, tax returns, recent paystub’s, and bank statements. If you are self-employed, you will need even more documentation such as profit and loss statements for your business.
Understand what you can really afford.
Once you’ve gone through the pre-approval process with your lender, they will have a good understanding of how much of a loan you can get and also what your cash situation is. Because so many purchases are going over the listing price, sellers are expecting buyers to include appraisal gap clauses and their offers. We wrote a whole blog post about that here, but it means that in addition to your down payment and closing costs, you will need to have extra cash available to cover any gap between the appraisal price and the purchase price.
In addition to submitting a pre-approval letter, we also ask our buyers to provide proof of funds in the form of a bank statement or a letter from a financial advisor that shows that they have the money in a bank account available to cover all of their potential cash needs.
Know what you want and what you need.
We encourage our buyers to sit down and make a list of absolute necessities and things that they would like to have. If it’s a couple purchasing the property we have both people do this separately and then compare their lists. Because of the low inventory there may be some sacrifices that you have to make, so we need to have a very clear understanding about the non-negotiables.
Be available for showings.
Since houses are selling so quickly, it’s important to be available to look at a home as soon as it comes on the market. This may be running out on your lunch hour or going before or after work. Waiting until the weekend to look at a home will sometimes mean it’s already sold before you even get in the door. be ready to move quickly.
Take the time to understand the contracts and the buying process.
Before we ever get in the car and look at a single house, we sit down with our buyers to review the Buy/Sell contract and talk about the buying process. We explain the different contingencies that are available and make sure that as a buyer you fully understand how the contract works and what your rights and responsibilities are. This is vital because as we mentioned above, what a great house comes on the market you need to be ready to move quickly. Our goal is to make sure that you’re familiar with a contract ahead of time so that when it comes time to sign you are ready.
Be prepared for inspection items.
There is no such thing as a perfect house. Every home will have issues that come up at the inspection, even if the home is brand new or impeccably maintained. Studies show that the low point emotionally during a real estate transaction for all parties is the inspection period. Setting your expectations ahead of time that there will be some inspection items will help you prepare. Once we know what the issues are, we will work with you to determine what is most important. Sometimes this involves getting additional inspections or having contractors provide bids for work that needs to be done. We will be there to help you through this process.
Be Patient.
In this tough market, finding your home may take some time. You may not get the first house you offer on. Be patient with the process, and trust that you will find a great house.
Be kind.
Buying and selling a home can be very emotional for all parties. Don’t forget that when you have to go into the house for showings or inspections, it usually means the sellers have to leave which can be hard on families, especially those with pets and children. Be understanding and considerate of the Sellers’ time. Kindness goes a long way and when the parties are all working together towards a common goal, the results are usually far better for everyone.