Looking to buy a home? Expect to make an offer if you are serious and the offer better be serious as well. People have this fantasy that you get to walk into an open house and offer 20% below asking price and get the deal done that day. That’s not how it works and the reality is that if you want to get the property you want, you need to make sure that you are a strong prospect.
Prospects in the housing market are people who want to buy and have the means to buy. Otherwise, you are just wasting everyone’s time. You should not start looking at homes first if you are serious about buying. Instead, you need to get to work on your finances and understand what’s needed to make your offer competitive, aside from the price.
House Hunting Tips
When looking at houses that are available you need to focus on three things at first, the local, the size and the price. Those three things will immediately tell you what will work for you and what will not. It does not matter if the two bedroom is more affordable if you have to have a four bedroom. It does not matter if this house is in the price range you can afford and is the size you want if it’s on the other side of town and either not in a great area or too far from your work.
You need to focus on these things before you start breaking down what to offer or what to research on a house to make sure it’s right for you. Those tasks need to be left to your realtor. You simply need to figure out what properties interest you and allow them to start digging on what will work for you or not and why.
Setting Your Budget
When it comes to determining your budget the best place to start is by getting pre-qualified for a loan. There’s no point in offering $450,000 for a property if you cannot afford the mortgage for that price tag. You need to select a lender and a price that you are happy with. Once you have that, you know what type of budget you can work with. If they offer you up to $550,000 in loans you know that’s your maximum budget.
Always remember that your budget has to include what you’re putting down, your move-in costs as well as any work that needs to be done on the property. You do not want to waste your time focusing on anything besides that, but make sure you include those additional costs, especially if the property you are looking at requires any work.
Fixing Your Finances
If your finances are not up to par, you want to address that first. Even if it takes a year, it’s better to buy with a strong financial profile than with a weak one. Why is that? Low credit scores, low down payments and things like that can increase your monthly payment costs by hundreds of dollars. That’s thousands of dollars extra that you have to come up with each year.
Sometimes the best option for a buyer is to take the time to pay off their debt, improve their income and their credit score. If you can improve these areas, not only are you a better prospect for buying a house, but you also get the benefit of saving thousands of dollars a year on your mortgage.
What Would Be A Good Deal For You?
When putting together your initial offer you have to make sure that it’s reasonable and respectable of what the asking price is. However, this is where your realtor can give you key insight. For example, the sellers are asking for $400,000 for their property and it has a roof that’s 20 years old. Your realtor points out that the house has been on the market for five months which means the sellers are probably getting anxious.
This is your chance to offer something respectable. You can come in at $370,000 but make the offer that you’re willing to go up if the current owners take care of the roof. This creates a unique situation for them. If they fix the roof you will pay the full amount. However, for you this is a great trade off because it saves you the cost of the new roof and keeps your insurance rates lower when you do buy.
Working With A Realtor
Hiring a realtor in the early stages is key, especially if you want to have a strong game plan on what to buy, where and what to offer. You also have to look at each property specifically to see what a fair value is for it. The seller who is asked to fix their roof may turn you down, but the other seller may say yes. This is why it’s good to have a game plan and budget that you stick with regardless of the property.
There will be other houses and the reality is that homes are sitting on the market longer than they have in years. If you are not sure what type of offer to put out there, speak with your realtor. They can guide you on what makes sense and what gives you the best options and deal.
