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What is Home Buying Power and How can a Buyer Use It?

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Buyers always want to have the upper hand when it comes to purchasing a property or at least getting an offer accepted. In a buyers market, the homebuyers definitely have the upper hand. This means there are plenty of properties on the market and prices are relatively low. In a seller’s market, there are plenty of buyers and very few homes, which means sellers can up the price of their property and get more eyes on their home. But how can homebuyers harness the power in a buyers market?

What is Home Buying Power and How can a Buyer Use It?

There are several steps to organizing your home buying power position before actually looking at property.

#1. Organize your finances.

Before looking at homes it’s important to understand how much you can actually afford in a monthly mortgage payment. Remember, that payment should include property taxes and maybe homeowner’s insurance as well. A $1000 mortgage can easily bump up to $1500 with these added fees, taxes, and potential homeowner association fees. Understanding how much you’ll be paying each month in a monthly mortgage payment plus general upkeep, you can attack the real estate market with a little more confidence and preparedness

#2. Consider up and coming neighborhoods.

An up-and-coming neighborhood is one that may have gotten a bad reputation in the past but could be turning itself around. You might see a lot of major renovation going on throughout the community and it has close proximity to other higher-end neighborhoods. Ask local stores and restaurant owners of prices have gone up in the last couple of years and if there’s a lot of young people, artists, and musicians in the area, chances are it’s on its way up. But, you can buy now and be ahead of the game later on when property values really increase.

#3. Be patient.

Finding the right home does take some know-how, knowledge, the right real estate agent, and a whole lot of patients. It’s okay to make a lowball offer but if you don’t get the counter offer you had in mind, simply be patient and perhaps wait it out. A seller can change their mind and come back to the buyer’s agent asking for another offer. Don’t be afraid to walk away because it’s sellers know that you are extremely motivated to buy their home, they’re not going to budge on price or terms.

#4. Mind your manners.

This is a very elementary thing but agents take careful note of customers who view properties and polite and respectful behavior can go a long way. Even if you’re only dealing with a buyers agent, that buyers agent wants to work the best for you and being polite and courteous along the way can really work wonders. They may offer extra tips, work extra hard, or put in those extra late-night hours simply to get you the exact terms and price you want. A little “please” and “Thank you’s” really can work wonders.

#5. Penny wise, pound foolish.

Try not to get so focused on getting every aspect of the deal exactly the way you want it because you tend to lose the big picture. If you are nickel and dining the seller to death they may throw their hands up and reject everything. A good rule of thumb to remember in the home inspection report is if you ask for everything you’re likely to get nothing so run over the mandatory items and deal breakers with your real estate agent and pick and choose your battles so that everyone gets a win-win in the end.

MORE GOOD STUFF:

Does the Layout Mean More Than Square Footage?

Who Pays for What in a Real Estate Transaction?

How to Sweeten the Deal in a Multi-Offer Situation

We Submitted an Offer But Haven’t Heard a Thing, Now What?

How to Sweeten the Deal in a Multiple Offer Situation

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Homebuyers can get frustrated when there are multiple offers on a highly desirable property. Even a solid, full price offer may not be enough to sweeten the deal. There’s smaller inventory than there was a few years ago and the demand is strong so buyers need to know how to create an amazing offer that will stand out above the crowd. Here are some simple ways to sweeten the deal on a multiple offer situation.How to Sweeten the Deal in a Multiple Offer Situation

#1. It’s not always about the price.

Sellers are looking for more than just the price. You might’ve even offered over the asking price, but if other terms are not as favorable, your offer may get rejected.

#2. Minimize contingencies.

Of course, you’ll want the home inspected but if you know you’re going to buy the home regardless of what you find, you can waive the home inspection or offer shorter deadlines to accommodate the seller.

#3. Get preapproved.

Most buyers are preapproved for a home loan before even making an offer but if you haven’t done this, you will probably get rejected right away. Make sure you are preapproved for the exact amount you are offering and sent a letter of preapproval along with the offer to prove you’ve done your financial homework.

#4. Simplify the offer.

You don’t need a lot of flowery words to sweeten the deal. Sometimes, unneeded language can lengthen the offer and feels a little threatening to the seller. Spell out the terms of the deal without complicating things and make it as easy and as flexible as possible.

#5. Have your agent stay on the ball.

Sometimes just communicating with the listing agent is enough to stand out above the crowd. Think of it this way, if the listing agent has some random offer come faxing in or email without any communication, it probably will not get as much attention as the agent that’s talking to the listing agent, communicating on what the seller really wants, and trying to be flexible with dates and solidifying the offer before actually submitting it.

We want all of our buyers to get exactly what they’re looking for and that means submitting an offer that stands out and is really attractive to the seller. Our experience with buyers and listing agents can put your offer ahead of the crowd.

We Submitted an Offer and Haven’t Heard a Thing? What Now?

Is a Verbal Acceptance of an Offer Good Enough?

What to Expect at the Inspection of Your New Home

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You’ve done it! You’ve pulled the trigger on an offer and the seller has accepted! Now what? Once the seller accepts your offer, even after there has been some negotiation, the transaction moves on to inspection. This is where your earnest money will be deposited and you or your real estate agent can set up the inspection. You are free to choose whomever you want as your inspector but often times your buyer’s agent will have a list of references and reputable home inspectors for you to choose from. It is not mandatory for you or your agent to be present during the home inspection but it is strongly recommended that you attend.What to Expect at the Inspection of Your New Home

Home inspectors know a broad range of information about a lot of different things when it comes to the house. They usually are not experts on every detail of the home. If they recommend having an additional inspection, such as to the roof or to the septic system, it’s important to listen. Some home inspectors do know a lot about many different features of the home, especially if they have been in the business for several years. The more experienced the inspector, the more trustworthy their information and advice can be.

It is always important to accompany your home inspector throughout the property asking questions and learning about your home. Remember, this is one of the most expensive investments you’ll ever purchase and it’s important to know as much as you can about the property, protecting it, and maintaining it. Home inspectors will issue a report of all of their findings which then you can use to negotiate further requests for the seller.

A good rule of thumb is that if there is a lot of issues wrong with the house and you “ask for all of them to be repaired you may get nothing” and end up with the rejected or terminated real estate contract altogether. Discuss your findings with your real estate agent to determine the best way to approach the inspection report and request addendum. If there are hazardous or unsafe items, large problem areas or issues that should definitely be addressed before the home is even sold, these are items to certainly ask for. Simple items such as a missing light switch plate or holes in the walls from picture frames are probably not worth losing the deal over.

You have several choices on the inspection addendum:

  • You can accept the home inspection as is and move the transaction on to closing
  • You can request money off of the purchase price to cover any repairs after the closing
  • You can request certain repairs or replacements be completed before closing
  • You can simply reject the entire inspection and terminate the transaction walking away with your earnest money deposit.

The inspection doesn’t have to be a scary event but it is something that is critical to loving and appreciating your new home. The home inspection will also be paid out of pocket at the time of the inspection. Home inspections can run anywhere from $300-$800 depending on the type of inspection needed. Additional inspections from specialists can run as high as $1200 depending on what they are inspecting.

Finding out all you can about your new property can help you make wise financial decisions on repairs or major replacements in the future. If you have more questions feel free to give us a call at any time.

Tina SaporitoThank you to Tina Saporito for her guest post this week. Tina is an expert in Palm Desert real estate in helping buyers and sellers in her area.

How Does a Buyer’s Agent Get Paid?

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Many homebuyers don’t realize that they pay a buyer’s agent nothing to use their services. So, it begs the question:   how does a buyer’s agent get paid?How Does a Buyer's Agent Get Paid?

A buyer’s agent works strictly with a homebuyer helping them negotiate for their terms, find the right home for their needs and their budget and need a mediator between the buyer and seller. The buyer’s agent is a licensed real estate agent for their area and can facilitate a real estate transaction on the buyer’s behalf. It is vital for buyers to have their own representation when conducting a real estate transaction. If the buyer chose to utilize the services of the listing agent when purchasing property, their best interest may not be considered since the listing agent’s primary job is to sell that particular house for the seller. A buyer’s agent’s primary job is to work exclusively with the buyer without any hidden agenda on selling one particular property over another.

However, this brings up the interesting topic of how agents get paid. Regardless of which home the buyer chooses, the buyer’s agent will receive half of the commission that was originally agreed upon between the listing agent and the seller.

For instance: let’s say the sellers of a particular property enlist the help of a listing agent. That agent writes up the contract with a pre-negotiated set of agreements such as the commission, listing price etc. The commission can be negotiated but is typically between 6 and 7% of the sale of the property. This percentage is then split between the listing agent and whoever brings the buyer, typically the buyer’s agent. This percentage of the commission can be split equally or it can be split unequally depending on the type of negotiations. Sometimes listing agents will decrease the listing agent commission to boost more buyer’s agents to bring in a buyer or because they are also helping the seller purchase another home in which case they would receive the buyer’s agent’s commission on another deal.

But, make no mistake, a buyer’s agent’s total responsibility is first to their buyer and not to the seller. Even though the seller will pay the commission to both agents, the buyer’s agent is still working exclusively for the buyer. Regardless of which home the buyer chooses, that agent will get paid off of the sale of the home. Buyer’s agents are responsible for negotiating their own commissions so it’s not something that the buyer ever needs to worry about.

The Very Best Home Buying Advice for Sunset Beach 2018

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The Very Best Home Buying Advice for Sunset Beach 2018

Each year we recap some of the best pieces of advice for home buyers. Although we are not nearly done with 2018 yet, I have compiled a great list. Here are our favorites and things we want all home buyers to know.

How to Prepare Your Finances for a Mortgage

Preparing to buy a house may be one of the most exciting and scariest moves you’ll make your whole life aside from having kids or getting married. This is a major undertaking but too many people are so afraid of it that they never end up doing it. This is a great step to take in your life, but only if your finances are well prepared. Because we deal a lot with buyers, we want to make sure that all of our buyers are well informed and have done the homework necessary to prepare themselves for a mortgage.

 

Be Prepared to Buy A Home – Get That Pre-Approval Letter

Almost anywhere you go, you’ll see the housing market is back. New listings are popping up every day, and buyers are calling and emailing that they are interested in seeing “this house I found on the internet.” After determining that they are not already working with another agent, I ask if they’ve talked with a lender about getting a pre-approval letter. Too often, that question is answered with, “No, but we just want to see this house.”

Should You Really Buy a Fixer Upper?

I know that Joanna and Chip Gaines have decided to end their Fixer Upper show on HGTV. I have to admit, I’ve been kind of obsessed with this couple. Not only are they the sweetest things ever, but their homes, decorations, and what they can do with shiplap is unbelievable. But, it got me thinking about our own fixer uppers around here. What the term really means and who should be buying fixer properties. Here’s my take on buying a fixer-upper and if you’re considering buying one, what to look for.

Is it Okay to Find a Realtor at an Open House?

Open houses, even though they may not actually sell the house, are still a necessity and something that most sellers require and expect of their agent. They can be a great marketing tool and something that homebuyers can view or tour while looking at homes. But there’s something we want to inform all of our buyers about, the agent that usually suits the open house may not be the agent selling the property, but actually using this is an opportunity to get more buyers.

Can I Buy a House That’s Not For Sale?

Is it even possible to buy a house that’s not on the market?The subject came up this week and I think it’s important to address it to potential buyers. We’ve had buyers that have looked at dozens of homes and nothing seems quite right. So is it even possible to buy a house that’s not for sale?

How to Find Out if a Home is for Sale Before It’s Listed

In tough or competitive real estate markets knowing when a house will be listed before it actually goes on the market can definitely be a great advantage to finding and buying the homeof your dreams. One of the biggest tactics is having a real estate agent that is well-versed in both buying and selling properties. In hot markets where there are not a lot of available homes, working with someone who has a large database of connections in the industry can really give you a competitive edge above those who don’t. Here are four tactics for finding a home for sale before it’s actually listed.

Real Questions to Answer When Choosing the Right Home

More than simply knowing how many bedrooms and bathrooms you want in a house are the real nitty-gritty questions such as what do you want the house to look like, the size of the house and lot, and other details. We want to ask the serious and usually not thought of questions when it comes to finding the perfect house. Use this checklist when figuring out exactly what type of house you’re looking for.

Finding the right home isn’t rocket science but it can be much easier when you’ve done a little research beforehand. We want all our buyers to be well informed and that means offering the best information, especially for first time home buyers. For answers to any of your real estate questions don’t hesitate to contact us either on this post or just call!  910-612-1931 or 910-612-1906

 

Be Prepared to Buy A Home – Get That Pre-Approval Letter

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Almost anywhere you go, you’ll see the housing market is back. New listings are popping up every day, and buyers are calling and emailing that they are interested in seeing “this house I found on the internet.”Be Prepared to Buy A Home - Get That Pre-Approval Letter

After determining that they are not already working with another agent, I ask if they’ve talked with a lender about getting a pre-approval letter. Too often, that question is answered with, “No, but we just want to see this house.”

Related: The 3 Types of Loan Approval Letters

Here’s why getting that pre-approval letter needs to be done before looking at any house:

1. It will tell you how much house you can comfortably afford. One of the worst things that can happen during your home search is to find out you don’t qualify financially for the house you just saw and fell in love with.

2. It will tell you which loan program is the best fit for you and your current circumstances. How much do you have available for a down payment? How much will closing costs be? Which loan option offers the best percentage rate for you? Meet with a trusted lender who can help you navigate through all the financial questions.

3. It will put you in a much stronger position when it comes time to write an offer. Sellers want to know that any offer they receive is being submitted by a serious buyer — someone who is ready, willing and able to buy their home. Including a pre-approval letter with the offer is one of the best ways to prove that.

4. It allows you and me to use our time most efficiently. Your time is precious, and so is mine. Let’s use it the best way possible by focusing on those homes that meet what you are looking for as far as location, number of bedrooms and baths, and most importantly price.

Read More: Real Buying Advice from Actual Buyers

Put yourself in the best position possible both with your real estate agent and the seller. Meet with your lender and get that preapproval letter before beginning that home search.  

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