— By Graham Hill
If you want to be more successful in your efforts to buy a home (and maybe even enjoy the process), real estate agents and other experts can offer some excellent tips for the home buying process.
In this piece, we have compiled recommendations you can use in your search for a new home. The home buying tips offered here help buyers create better working relationships with their agents, write offers that are more appealing to sellers, and close deals with less stress (for everyone involved).
Being prepared and well-educated will help you have a better experience in your search for a new home.
Show Consideration for the Other Parties
To begin, there are essentially three parties in the real estate transaction: You, the agents, and the seller. When you are prepared and respond quickly, you create a better experience for your agent and the seller, making it more likely they will cooperate with you toward your goals.
In many of the best practices presented below, the reoccurring themes of preparation and quick responses will be seen again and again.
Before You Find an Agent
Being prepared and clear about what you want is a good start toward working with an agent and finding the perfect home.
Some common questions buyers can consider are: In what area or neighborhood do you want to buy? What is your budget for the home purchase? How much of that budget is available in cash (versus a loan) to buy the home? If you are buying the home with a partner or a spouse, are you in agreement about these big questions?
Showing you have “done your homework” on these initial questions is a good first step. Your preparation demonstrates to agents that you can be a good client, and provides the agent with the information they need to help you toward your goals.
Determine Your Budget
One of the first things an agent will want to know is the buyer’s budget for purchasing a home.
The home buyer’s budget will often determine what neighborhoods are appropriate, the size of the home, and other requirements for the property search. Buyers can come to the conversation with clear ideas of how much money is available for a down payment and the source of that money. From there, your agent (and perhaps a mortgage lender) can determine a working budget, and get you pre-approved for a home loan.
In practice, most buyers are eager to start looking at property. Because your budget puts limits on which properties are right for you, communicating an upper range for the cost of the home is an important first step.
The Source and Liquidity of Your Funding
After you have determined a budget, the next step is being clear about where that money will come from, and what it will take to make that money available.
It is not enough to have a budget; the funds for your purchase must be available for the sale. Buyers that can make all-cash offers for homes are in an ideal position to make a strong offer. For buyers that want help financing a home, a clear indication of the source of the down payment can help lenders determine a range for a loan.
Buyers can be prepared for any time and effort that might be necessary to make the down payment available for the sale – that work can be done in advance, so the buyer is ready when an ideal property is available. As a buyer, you can begin to sort out those circumstances before the sale, and have answers ready for your agent and for lenders.
If you currently own a home, and want to use proceeds from the sale of that home to buy the next property, working through the details about the sale of your existing home with your agent should be an expected part of the conversation.
Being clear about when you can provide cash for the transaction, as well has having your documents ready to apply for any necessary loans, will help you close quickly.
The ability to close quickly is an important part of making a successful offer to a seller.
Maintain Your Credit Score
If you would like a loan to help you buy a home, your credit score will be assessed as a part of the loan application process.
“A higher credit score can help you get a better interest rate on your mortgage. Lenders want to see that home buyers are reliable and responsible in paying off their loans. Find out what your credit score is. If it’s not strong enough, it’s a good opportunity to look at your finances and implement some strategies to boost your credit score. This can help save you thousands of dollars in the long run.”
— Sandy Yong, personal finance author of The Money Master
Because a good credit score will help with financing, smart buyers will avoid any actions that might negatively impact that credit score leading up to the sale. You can be a more attractive buyer when you keep up with your payments, minimize money transfers, and keep lines of credit open (without taking on new debt).
Your efforts to maintain or improve your credit score will improve your opportunities for a loan, and help you complete your purchase.
Looking for a Buyer’s Agent
Before you begin looking at property, find an agent that you can trust, and that you can work with through the ups and downs of the home buying process. A good buyer’s agent can help you choose an ideal neighborhood, assess the current (and future) value of a property, guide you through the home mortgage process, and write a compelling offer.
“[A]n excellent agent knows how to write a winning offer. They call the listing agent to ask EXACTLY what the buyer wants. They get creative. They get the lender to call the listing agent. A talented agent can make all the difference in being the winning bidder.”
— Melissa Savenko, Real Estate Agent at Long & Foster
Talk to more than one agent. The final decision on which agent to work with is often based on the agent’s abilities, your sense of their professionalism, and the feeling you have as the buyer as you communicate and collaborate with that agent.
You should feel comfortable asking questions in this process. Early questions for your agent might include: How and when will you communicate? What do you need to provide in terms of documents? What is the approximate timeline for the home purchase? What other responsibilities do you have as the buyer?
As you meet with a few agents, your rapport as you discuss these topics will both set your expectations for the relationship, and give you a chance to see how the agent communicates. These discussions will also improve your education about the buying process.
There are both new and traditional ways to find a real estate agent. Several web services exist that offer agent reviews, rankings, and sometimes personal referrals to local real estate agents. Other home buyers prefer to ask for a referral from friends or family.
An agent that is experienced and that you can develop a connection with will be a strong asset for you as you work to close a deal.
Working with Your Real Estate Agent
After you have screened a few agents and made a commitment to an agent you feel you can trust, it is time to begin your work together.
While you are waiting for the right property to become available, stay in regular communication with your agent. A good agent will lead a client and will make good suggestions, but your feedback and contributions along the way can help the agent to know what is right for you. Provide details and examples of what you like (and do not like) to help the agent and to keep communication flowing. Check in with your agent regularly and respond quickly to requests for information or meetings.
Being consistently ready and communicating well with your agent can show you are a serious, dedicated buyer, and will help you get more from your relationship with the agent.
Have Your Mortgage Agreement Ready
You can show your agent and the sellers that you are a serious buyer by having a current, up-to-date pre-approval letter from a lender stating that you are pre-approved for a loan.
Being “pre-qualified” is not the same as going through the loan application process, submitting your financials to a lender, and getting a pre-approval letter you can present to sellers. The price of the specific property will make a difference as the loan is issued, but presenting evidence to the seller that you are pre-approved is often a requirement of a successful offer to buy a home.
Sell Your House First
If you currently own your home, and want to use the cash from the sale of that home to buy your next home, completing the sale of your existing home first can help your position as a buyer. When you sell your existing home first, those funds are easily committed to the next home, and the seller can be more certain the transaction will be successful.
If you cannot sell your home before you make an offer on a new property (most buyers cannot), one strategy would be to get a commitment from a buyer for the purchase of your existing home that includes a flexible move-in date. Some buyers will be happy to agree on price and can be accommodating (to a degree) on when they take possession of the property. You may be able to get into contract for the sale, and from that position, show you can quickly provide the funds if your offer to buy the new home is accepted.
Make Reasonable Offers
While some negotiation can be a good idea, that does not mean you should start with a bid that is below market value.
If the seller has an experienced agent (and if other offers are coming in), they will have a good idea as to the value of their home. A low offer might solicit an instant rejection, and offers that are unlikely to be accepted can be a misuse of your agent’s time. If you and your agent have done your homework on comparable sales prices in the area, you can start with a purchase offer that is both fair and within your budget.
A strong offer includes a reasonable purchase price, but the speed and ease of the transaction can also be major factors that influence the seller’s interest.
Offer a Bigger Deposit
There are sometimes other creative ways to make an offer more attractive; offering a higher deposit may improve your offer without increasing your total offer price.
“Contract deposits are typically 10%, but a buyer could offer to put more on the line. This move reduces the risk to the seller.”
— Robert Rahmanian, co-founder and principal at REAL New York
Even where the purchase price is the same as another buyer, you can show a greater commitment (and some good faith) by offering a higher deposit of earnest money. You should not make a deposit until you are sure of your intent to buy the property, but if you are willing to put in more earnest money, the seller may have more faith in your determination to follow through with the purchase.
Communicating With the Seller
There may also be various wants and needs on the selling side that provide opportunities to improve your offer by developing rapport with the seller. If the seller wants special terms of any kind, buyers can create a more compelling offer when they show some consideration for the seller’s needs.
“Real estate transactions are major life events for most sellers. There is a lot of emotion tied up in these transactions: hope, fear, anxiety, maybe even remorse. Therefore, it is good practice to communicate often with the other party, try to find a connection, and reassure them that you are the best person for them to work with.”
— Cody Rudolph, Real Estate Consultant
If the seller needs more time to move out, wants to take a particular appliance or fixture from the property, needs to negotiate an easement or some other matter, knowing what terms are ideal for the seller might help to bring the deal together.
You can ask your agent to talk with the seller to see if there are any conditions on the selling side that you might be able to satisfy; needs on the selling side provide additional ways to negotiate without necessarily offering more money.
Limit Contingencies
Beyond cash, your ability to close quickly is a powerful tool of effective buyers.
After an offer is made, the buyer has more access to the property and often receives a disclosure package (and other records) from the seller. The buyer may then have the home inspected or the property surveyed (these steps may be required as part of the lending process). These inspections (and the outcome of those reports) can cause delays and add stress to the deal. When you can communicate a commitment to the seller (in your offer letter) to schedule your inspections in advance, and to sign off on contingencies quickly, your offer may be more likely to be accepted.
Respond Quickly, Sign Quickly
The importance of being responsive and showing consideration for the other parties continues through the stages of having your offer accepted and closing the deal.
As you proceed toward taking delivery of the property, continue the good practices of
answering questions quickly and completely, signing your documents on time, and removing contingencies in a timely matter. Your commitment to these guidelines will help you complete the closing process and avoid complications (and additional expense).
Persistent, Consistent, and Calm
Buying a home is an emotional experience and there will inevitably be some ups and downs along the way. Ideal properties may be sold to other buyers, negotiations can fall apart, there may be complications with financing, or contingencies with the property that have to be managed.
Your ability to continue to come back to your agent (or a given deal) and address those issues will help you discover solutions or healthy alternatives. When you are persistent, consistent, and calm, you are more likely to accomplish your goals.
We hope the ideas presented here serve you in your search for a new home.
