Now you have the right real estate agent and mortgage lender. It is time to go house shopping. Make sure you wear your track shoes. You might have to move fast.
In the last installment of Home Buyer Bootcamp, I stated the best way to find a house is first to find an agent. The second priority is to get a suitable mortgage lender and get qualified. Top Realtors often have go-to lenders that they work seamlessly with which creates a formidable home buying team. That said, you may choose any lender you like, and your agent will do their best to coordinate with them.
Sellers Home Purchase Paradox
An often asked question is how someone sells a home and buys another when they have to sell their existing home first. It's tough to get a home seller to consider a home sale contingency of any kind (even if your current home is under contract), especially when there are multiple offers. A deep dive into your finances may reveal you can purchase the new home without the sale of your existing home. If you have ample equity in your current property, you may consider a swing loan. A third and sometimes riskier option is hard money deposits.
Of course, no one wants to risk deposit money or have two mortgages, and that is not the goal. The goal is to make your offer look as attractive as possible with the least amount of risk. An experienced agent can give you many viable options that match your desire to your risk tolerance and diffuse the home purchase paradox. We will discuss these and more options in more detail in the offer strategy segment.
Setting Up the Home Search
You and your real estate agent have consulted with the mortgage lender, and you understand your financial parameters. Now it is time to establish home shopping criteria, which consist of things like location, price range, beds, baths, etc.
Here is an example of how I counsel buyers relative to price: Your price range is $150,000 to $200,000. Set your search at $145,000 to $220,000. If your range starts at $150,000, you will miss out on homes listed at $149,900. By going approximately ten percent over you allow yourself the opportunity to track homes that may later get price reductions. Creating a price range is often a product of knowing what your monthly payment limit is. You may find a higher-priced home that has lower property taxes, thus bring it into your payment range. Someday home search websites will allow buyers to shop based on monthly payment. Until then, I suggest trying my search formula.
Let's See That House Now
Your phone starts to vibrate; you get a text and email. A property has come available that meets your selected criteria, so you check it out - This could be the one! What should I do next? Call your agent and establish the soonest possible date and time when you can visit the home. DO NOT DELAY! Your agent will schedule the showing and contact the listing agent to see if there are any offers submitted or expected. I am a proponent of sending my client the Seller Property Disclosure Statement. They may be allergic to pets, and the disclosure will note that there are four dogs and three cats at the property — no need to sneeze your way through that one.
Again, DO NOT DELAY! If it is Monday and you cannot see the home until Thursday, you may want to cross your fingers. It is also important your real estate agent has the flexibility to meet your scheduling demands. Make sure you discuss your agent's availability upfront. I have a great team of agents I work with, and we pride ourselves on our ability to get our buyer clients into homes promptly.
As you preview more houses, you may see things you desire that you were not familiar with when you initially created your search criteria. Make sure to discuss these things with your agent and make adjustments to the search criteria when necessary.
The above scenario will play out until you find the home you want to purchase. Next article in the series will get into offer strategies so stay tuned!
Knowledge is Power!
Jeffrey C. Hogue