This isn’t your usual, “I’m trying to sell to you” real estate blog post. Because this is my personal blog, I wanted to bring a different spin of advice from a pro, but written for a friend. So, I’m taking my sales hat off and giving you the advice that I would give to friends and family if they were looking for real estate in another market and couldn’t buy from me.
1. Know your credit score before you begin looking. There are specific rules about credit score minimums, how soon you can buy after a foreclosure or bankruptcy, etc. If you know where you stand, you can answer the questions of your agent and mortgage officer much more easily. Credit reports are free yearly but credit scores are not (and don’t believe those wonderful scam commercials that say you’ll get your score free). I personally use True Credit to monitor my reports and scores every month because I’m in rebuilding mode, but you can just buy a score when you need it if you aren’t repairing items. Yes, it costs each month, but I’m also able to see what happens when I pay something off in real time and how that affects my credit score from all three bureaus (and by the way, usually your middle score is used in determining eligibility). Plus, because it’s offered through Transunion, which is one of the bureaus, I get several types of analyses that help me determine what I need to do next.
2. Choose your agent carefully. I can’t stress this enough. National surveys tell us that almost everyone contacts only one agent before choosing who they work with. And picking the right person has to do with so much more than just negotiation and experience. There are also a lot of agents who are willing to take on anyone as a client and push them into whatever works because of the bad economy. Find someone who actually listens when you talk and can explain the processes (and legal documents) well. Ask questions via phone or email BEFORE you go on a showing (which can give them grounds to claim the commission) especially about the type of loan products you can get based on the location and the condition of target properties. You wouldn’t keep going to a terrible doctor, so why use a terrible agent?
3. Use the local MLS site to view properties. Many times, the other sites featuring local results don’t pull the listings correctly, or they only pull them once a day. By using the local MLS site (here’s our site in NKY – click on Find Properties in the top left corner) you get the information updated in real time and displayed exactly as it was entered by the agents, not to mention many more details that the other sites don’t bother to use. And never, ever pay for listings, ever.
4. Don’t lead us on. If you have zero intention to buy for a year, that’s fine and we’re more than willing to help you prepare and look occasionally, but don’t expect us to be okay with looking at several properties if you aren’t serious. Remember that we work solely on commission, which means we only get paid when a deal closes, and out of that commission comes self-employment taxes, franchise fees, brokerage fees, high-cost individual health insurance, office supplies and technology, MLS fees and union dues, and most importantly, gas money and wear-and-tear on our vehicles for multiple showings, inspections, contract writings, and closings. Spending $80-100 in gas money for someone who isn’t serious just isn’t a smart business move. An occasional showing and lots of conversation/preparation is totally fine.
5. Get prequalified before you start, and preapproved when you are serious. A prequalification is just talking to a mortgage broker, giving them your information, and them telling you where you stand and what you could possibly qualify for in a mortgage. A preapproval is an agreement with a bank that if you find a property that works with their requirements in a certain time frame, they will (barring any unexpected discoveries) finance a mortgage up to a certain amount at a guaranteed interest rate and monthly payment. Mortgage brokers will pull your credit information for a pre-approval, and they are only good for usually 30 days, but most sellers require a pre-approval when you submit an offer in today’s economy.
6. Be ready to jump if you find the right property. Even if a property has been on the market for months, it’s no guarantee that it will be there for a few more weeks. Be ready to make an offer (see #5) when you find the right property. You may swoop in at exactly the right moment before the seller is going to give up and get a great deal. Sometimes offers are accepted in a matter of hours, and waiting a few days could put you out of the game altogether.
7. Use a comparative market analysis to help determine what you should offer, not an arbitrary price that you thought up or someone suggested out of the blue. A good agent will present you with properties that have sold recently and are on the market before you decide on a price. Sometimes you’ll want to offer a much lower price than asking, and sometimes the asking price is already a steal.