Whether you are trading up to another home or are a first time home buyer, here are some of the most important things you should know to ensure a process that’s as smooth as possible, keeping Murphy’s Law into account (and in case you are unsure, Murphy’s Law isn’t bad, it only states that anything that can happen will happen).Move-up buyers will be a little more seasoned in the process and know what to expect, so these points are especially valuable if this is your first time buying a home.
1. Get pre-approved.
There is no point in wasting your time or an agent’s time if you don’t know what you can afford. It can go either way, and finding out your purchasing power can help you narrow down your search with the two most important variable: price and location. We could throw an extra one, that being of inventory. At the time this information is written, we are in the thick of a sellers’ market and in many cases, homes sell for over-asking with multiple offers. We’ll help you navigate that a little later JThe pre-approval process is completely free and takes a few hours at the most (at least when working with lenders we trust. You are free to talk to anyone you do banking with, some larger financial institutions may take longer, while our trusted lenders work aggressively and effectively, helping our clients win in multiple offers even when not with the highest offer).
2. Upon pre-approval, you can start looking by price or area.
The location will of course determine the price, so it becomes up to you to decide if you prefer a hot location and get a little less (or be willing to pay a little more), or if you want to look in an adjacent area, where you may get more bang for your buck in terms of size or quality.
3. If you are buying, remember that you are NOT paying your agent.
The buyers’ agent’s commission has already been decided by the seller upon signature of the listing agreement. Your buyer’s agent is there to represent you and has a fiduciary obligation to you only, not the seller. The listing side has a duty to the seller.
4. Negotiating your price:
while your agent is there to negotiate the best price for you, it doesn’t always mean the lowest price. In a sellers’ market, inventory is low, sellers hold the cards, and homes tend to go for multiple offers. You have to be ready to write an offer above asking price, or offer guarantees or other variables that can make your offer appear stronger than that of others. We have a track record of winning close to 100% in multiple offers because our offers are the strongest! Our proven strategy has worked systematically for all our satisfied clients!
5. Price is not always the deciding factor:
are you looking to flip a home in an area where home values are growing quickly (e.g. “Silicon Beach” in Santa Monica, CA, and its surrounding neighborhoods)? Or are you buying the dream home for your family (present or future) in a safe area with great schools and a yard?
6. Know your numbers:
don’t just look at your purchase price, look at the difference in your monthly nut. A $10,000 increment over asking may cost you less than a couple of grande lattés per week once you factor your interest, how much down you put in and more. You have to decide what’s worth the most to you, and we help guide you in that process.
7. Getting your offer ready:
in today’s market where homes sell faster than you can think about them, you have to be willing to pull the trigger quickly (even if you’ve been looking for a while). First time home buyers tend to look for the perfect home, and sometimes, when it’s the first home they see, they feel the need to compare to other properties and by the time they come back around to it, the property is gone and they later “chase” that same house calling it the one that got away. Homes are not like cars! How do you get ready? If your offer is strong, and are pre-approved, you may want to start scheduling your inspections early, even before getting an accepted offer if things look good in your favor! It shows motivation and also is a great way to make your offer appear stronger by shortening certain contingency periods. Sellers usually prefer short escrows, so if you can do it, go for it!
8. Schedule your inspections:
these are entirely up to you, and you can do as many as you want, or as few as you want. The condition of the property can help you assess what’s needed, though ultimately, it has to do with your peace of mind. While the selling side will provide you with disclosures, they only address known issues and many can remain hidden. Knowledge is power and can give you an advantage in negotiation during escrow, before removal of contingencies.
9. Additional costs:
there are many costs buyers are not always considering when purchasing a home, and they can add-up quickly! First you have your inspection costs. Then, if you are financing, you have lending fees. Tack on escrow fees, title, closing costs, moving fees, repairs (if not handled by the seller). Don’t forget property taxes, HOA (for condos/townhomes), transfer title fees, property insurance (like for your car), loan insurance… It can get pretty daunting, but you may also get a lot of tax breaks.
There are many services out there promising you deals, discounts, breaks or kickbacks. Don’t be fooled: nothing will take the place of an agent-to-agent negotiation, and while a $5000 kickback off commission from an online broker may seem appealing, your dedicated buyers’ agent can get you that and more with their network of established relationships in terms of credits, price reductions or other costs based on the quality of the inspections. Also, agents work best with agents they know with brick and mortar brokerages. Because we work on commission, not salary, we have a vested interest in being able to deliver the highest service possible. Online brokers collect a salary and if they’re willing to give up a portion of their commission before even writing your offer, how good do you think their negotiating skills are?
While you may wonder if the buyers’ agent is trying to negotiate the lowest price (which usually happens only in a buyers’ market), what is their interest in doing so if it reduces their commission? Our livelihood and reputation hinges in the quality of service we deliver to our clients, and we are confident that you will hire our services again when it comes to buying another home, and/or selling the home we helped you buy when the time comes. We’re in the business of building relationships, and our network of agents, contractors, lenders as well as our database of clients and homes are at your disposal to deliver unprecedented service!