Anyone who watches some of the home buying and selling reality TV shows knows that being shrewd and not showing your hand first is the keenest way to get the best deal.
Although the process may resemble a game of Texas Hold’em, knowing when to “hold ‘em and when to fold ‘em” in home buying and selling speak could mean the difference between getting the deal done or not.
Before you put your home on the market or venture into the throws of house hunting, consider how these strategies could help to sway the deal in your favor:
Everyone wants that luxurious multi-million dollar home and, in fact a number of homeowners had that home around the time when the housing market bottomed out.
Before you put your home on the market or consider buying, know what you can afford and be realistic about your ceiling or basement price. Run all the numbers, including possible expenses that could occur in the near future such as college loans or an additional car payment and then arrive at a number using your income to offset your debt. Not only will you be more focused, you will be confident knowing that the price point is something that fits nicely into your lifestyle.
The days of bidding wars are back, especially for homes under the $1 million mark. Once you’ve created your budget think about stretch and what you could do in the event a home came on the market that was worth a little more than your total allowance.
This doesn’t mean going far over budget, however in the event of a bidding war even being $1,000 over the other bids could put you in an advantageous position. Run the total monthly payments and be sure that number won’t leave you squeezed. Stick to that number, even if the bidding process becomes emotional. Be ready to walk away if the price is driven too high.
When it comes to pricing or a bidding war you should have a concrete idea of what the home is worth based on comparable homes within the market. Run a search using the multiple listing system online and print out at least three comparables. Go through each house’s features and break down the pros and cons (for example the house you want has a pool but the comparable does not) in order to arrive at what you believe is a fair price.
A key element to ensuring you purchase a home you can afford is the financial aspect. If you can’t pay all cash for the home, your best bet is to find a lender who will pre-qualify you for the purchase. When it comes to choosing a buyer, sellers want the “cleanest” deal possible. So if you can’t come in with all cash, the next best deal (and cleanest) is being pre-qualified. This tells the buyer you are serious about purchasing the home and that you have the financial support to continue with the transaction.
While the pre-qualifying lender does not necessarily have to be the lender who ultimately funds the loan, identifying the best lender early in the process will help reduce a number of headaches and possibly red tape delays down the road.
When it comes to finding the best lender, the first place you should start is with your credit union. Credit unions are notorious for having highly competitive rates and minimal fees. Additionally, because credit unions are not in the market to make profit, your loan officer can be more unbiased about which loan strategy will be the best fit for you.
Ideally, borrowers should gather quotes, which should include all fees, from at least three lenders in order to make an educated decision. Also, ask questions and do a little research with regard to the mortgage process.By Gina Ragusa