The Essential Guide On How To Buy Like A Pro
Leverage the Power of the Internet
By using a combination of MLS searches, 3rd party property search sites, classified ad sites like Craigslist, and investing in Google and Facebook ads, we can help you hunt for real estate bargains from day one.
These property searches will also help you get your finances in order, and get a better idea of the size of the mortgage you’ll need to live in the neighborhood or area of your choice.
We can also run email marketing campaigns aimed directly at our network of contacts in order to help you find properties not publicly listed. These could reveal amazing deals impossible to find otherwise.
Find The Right Type of Financing
Just like you would always get a second opinion from a doctor, you should always get a second (or third, or fourth) offer for a mortgage loan.
Interest rates and fees are only a few of the factors in selecting a mortgage provider. Self employed loans and loans that don't require the sale of a current home are options you should consider.
At the same time, first-time buyers might look into FHA type loans or grant assistance programs.
Alternative financing vehicles such as bridge loans and home equity lines of credit allow you to buy a home with cash-like financing giving your offer preference over competing offers.
As always, our team of real estate professionals can help you find the right lender and financing tools to help your negotiatig position.
Be the First (or Last) to Make an Offer
The phrase “You snooze, you lose” is especially relevant for real estate buyers.
That’s because the buyer that makes the highest offer doesn't always get the home. In many cases, it’s the one that makes the first offer.
If the seller is in a rush to sell, and the first offer is a good one, it’s quite possible the seller may simply accept the offer on the spot.
So when looking for a great deal, you must be ready to make the FIRST offer.
To make sure that happens, you MUST get your finances in order. Before you start making offers, make sure sure to have your pre-approved loan by the bank (and if you’re able to pay in cash, even better).
And once you’re pre-approved, don’t delay in making offers. Work with our team to establish the parameters for a good deal. And as soon as a deal that meets those requirements hits the market, make an offer in the same day.
Also, as you wait for a great deal to hit the market, we can keep an eye out for properties that have been stuck on the market for a long time. The owners of these homes could be more willing to sell at a discount, because they’ve been stuck paying a mortgage for the entire time it’s been listed.
Clean Offers Often Beat Higher Ones
In today's real estate market buyers are getting extremally aggressive to beat out the competition.
Outside of the purchase price, a seller's most important concern are inspetions.
The general home inspection, a radon or mold test, a pest inspection, even items like home warranties and surveys can muddy up an otherwise good offer.
Within reason, if you are willing to accept a home in it's as-is condition, it is very hard for a seller to pass up on your offer, even if the price isn't perfect.
An experienced real estate agent walks through hundreds if not thousands of homes each year. Don't shy away from asking questions about the homes condition during your walk through and take as much time as you need.
Shop During the Slow Season
Even if you don’t live in a place with a harsh winter, most home buying and selling activities take place during late spring and summer.
As a result of that seasonal increase of activity, home prices go up.
So if you’re willing to brave the cold and wait until winter, you may be able to capitalize on some amazing deals. People who are willing to list their homes in the middle of the holidays are typically very motivated to sell. This, of course, could lead to amazing deals for you.
On the other hand, there’s a downside to shopping for homes during winter: you’ll have fewer homes to choose from. And when making offers, you’ll have fewer recently sold comparable properties to help you calibrate your offers.
Secret Tip #1: Leverage the Earnest Deposit
Earnest money, also known as good faith deposit, is an amount a purchaser includes with an offer to show how serious they are.
At closing the buyer gets to apply this amount to their down payment or closing costs but if the deal falls apart, the funds go to the seller.
That is why the larger the amount of the earnest deposit the more attractive it is for the seller, but most buyers simply use the typical 1% amount and miss a huge opportunity.
An even bigger and more secret move is to write the earnest deposit check not to the title company, which is typical, but directly to the seller.
This is not a move for the faint of heart but when you hand a check directly to the seller, what does that say about your offer? It's the closest thing you can do to offer a guarantee you won't back out and that is how you beat other offers.
Drive for dollars
A tactic commonly used by real estate investors is driving around neighborhoods they’re interested in to find good deals.
Yes... It really is that simple.
These investors would get in a car, drive around the area they are interested in, and look for homes that give signs of a potentially motivated seller. This includes homes with a “for sale by owner” sign, homes in disrepair or showing signs of neglect.
Next, these investors would knock on the door, and introduce themselves to the owners. They let the homeowners know they’re interested in buying a home in the area, and would ask the homeowners if they could point you to someone looking to sell, or if they themselves are interested in selling their home.
If no one answers the door, even after several attempts, not all is lost. These investors could do a property search in the city’s public records or a reverse phone number search to find the owner’s contact information.
Not So Secret Move -Be Flexible
Real estate agents are notorious for talking too much. The more you learn about the sellers motivation, the easier it is to tailor an offer to their preferences.
By allowing the seller to choose their preferred close date and other aspects of an offer you can distract them from only focusing on the purchase price.
Another option is to offer the seller post occupancy -without cost. Having a few extra days to move after closing can be extremely attractive under certain circumstances.
Cash is Not Always King
Any offer that includes a mortgage loan is considered "contingent upon financing."
Even with a "pre-approved" buyer their is risk. I've had buyers loose their job, buy a boat, get arrested, and get in a serious car accident-on their way to the closing- which impacted their ability to get financing.
One of the ways to alleviate some of that perceived risk regarding a financing contingency is to use an appraisal shortfall clause.
In the event of the bank appraisal falls short of the agreed upon purchase price the purchaser is willing to contribute additional cash up to x amount.
An appraisal shortfall clause is almost essential in any offer with an escalation clause, which is another powerful way to out manuever other offers.
Get in touch with real estate wholesalers
Real estate wholesalers make a living in finding amazing deals, marking them up a bit, and reselling them to real estate investors.
Some of the homes they resell could still be fantastic deals. Meaning that with the right wholesaler, you could still find amazing deals without the need of doing all the work of finding the deal yourself.
Real Estate wholesalers can be found in local real estate clubs, google searches, and industry networking events. Once you get in touch with a real estate wholesaler or two, make sure you give them your contact information and tell them to add you to their buyers’ list.
Again, many of these properties fall into fixer-upper territory, and you'll need to remain flexible on location. Make sure you keep that in mind.
Hire an Amazing Real Estate Agent!
As a home buyer, you have absolutely NO reason why you shouldn’t hire the best possible real estate agent in your hyperlocal area.
We bring a wealth of expertise, street smarts and knowledge to find you the right home at the right price. We can use those skills to help negotiate a far better price than you could get on your own.
Our services offer a buffer of protection. Thanks to our experience and expertise, we can see toxic deals a mile away and can warn you against them. We can also help you avoid common legal pitfalls in real estate which you could stumble into on your own.
In Conclusion
Don’t believe the naysayers. It’s not just rich real estate investors and brokers that find the best real estate deals.
Though it may take effort and patience, if you work together with a knowledgeable and experienced real estate agent, and know where to look, you’ll also be able to find some of the best possible deals in the area.