Finding the perfect home that has all your needs and most of your wants often is not the problem. The problem lies in getting your purchase offer accepted and approved by both the seller and your lender. Here are 5 secrets you must know about before you make your offer.
Secret #1 – Don’t Dismiss Older Homes
There is a general fear that if you buy an older home then you are going to have a lot more problems. While this may be true of some older homes – especially older rentals, bank foreclosures or short sales – this is not always the case. I have seen some older homes that were built so strong that I don’t think a Category 5 hurricane could touch it; but I’ve also seen some newer homes that was an appraiser’s nightmare.
Older homes generally have more personality, character and originality then newer cookie cutter construction. They tend to sell for less per square foot than new construction – meaning you could get more home for less money.
Look for older properties that have had major components remodeled within the last 10 years including the roof, electrical and HVAC. Make sure you have a home inspection completed by a qualified third-party. Pay particular attention to structural items.
Secret #2 – Include Repairs in Your Purchase Agreement
So, you may be thinking, “Right, like the seller is going to accept that.” While it is true that not all sellers will want to pay for repairs out-of-pocket, the decision to work out your repair requests with the seller has more to do with your lender. Depending on the type of loan you are getting (such as a VA loan or USDA), your loan approval will be contingent on finding a home that meets health and safety standards. If your home inspection revealed issues with the electrical, plumbing, stairs or other safety concerns, your lender may not approve the purchase.
So why not work this out with the Seller. You could increase your down payment. You could offer a little more for the house and wrap it into the loan – since you will have to make the repair the day after closing anyway.
Secret #3 – Know Your Market before Making an Offer
The seller wants all of your money; your lender wants you to pay nothing; and the appraiser… well we won’t go into that. The only way you will be able to satisfy them all and walk away with a good deal is to know your market before you make the offer.
Work with your real estate agent to determine a range of value for the home. This should be based on the closest and most recent comps that are in the same age bracket as the home you are interested in. Your goal here is to find a price that will come close to the appraised value and then offer a little less.
Secret #4 – Be Careful with Your Contingencies
Sellers hate offers with contingencies. They think the buyer isn’t serious or doesn’t have the money to close. If you are making offers in a competitive area (i.e. homes are on the market for less than 4 months), then you need to reduce your contingencies.
Don’t demand that the seller pay your closing costs. If you don’t have the money, wrap it into your mortgage. Or offer more for the house and then have the seller pay the closing costs. If closing costs will be $5,000 and your purchase offer is for $165,000, why not make your offer $170,000 and then ask the seller to absorb the closing costs. It’s a win-win and your lender is none the wiser. Also, don’t ask for a bunch of little repairs. As long as it is not health or safety related, you can take care of them after the closing.
Secret #5 – Make Your Offers Stand Out
Homeowners are sentimental about their homes. So why not include a brief letter about what you love about their home and how much you would love living there. It just might be your ticket to getting the offer accepted on the home of your dreams.
Note: Most home buyers go about the buying process all wrong… Just 15 minutes on the phone with me will prepare you to buy a home with less stress, all while saving a bundle! Request your FREE Strategy Session here!