First things first: Buyers must have a firm understanding of their budget. When you get preapproved by your bank, you know how much money you have to spend, and that knowledge helps you narrow your options and focus your search. As well, agents and sellers often won’t give you the time of day unless you’ve received backing by the bank.
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- 10 Simple Mistakes That Could Cost You Your Dream Home
10 Simple Mistakes That Could Cost You Your Dream Home
You Don’t Get Preapproved
You Confuse Preapproval with Final Approval
It’s important to remember that preapproval is preliminary and nonbinding. Once the deal is in motion, the bank can still turn you down or refuse to loan money for a particular property. Although this doesn’t happen with great frequency, consider devising a backup plan, just in case.
You Don’t Act Fast Enough
In a seller’s market, speed matters. Buyers must take necessary steps to stay ahead of the pack, from putting out the effort to see the listing the day it comes on the market to making an offer as soon as possible. Of course, buyers also need to avoid ill-considered decisions, but when a particular neighborhood is in high demand, the dawdlers will lose.
If you’ve found a home that works for you, trying to buy it at a bargain can be a foolhardy strategy. You may not get a chance to raise your bid if others are bidding too. Do your research on comparables, and make your very best offer right from the start.
You Don’t Charm the Seller
Sellers always think their house is the nicest one in town, so don’t overtly criticize it in front of them. Consider writing a sweet note about your family and how much you all love the home. Make it congenial and specific, giving reasons why you think you'd be happy living there. Be careful not to reveal too much about your situation, which could undermine your position in negotiations.
You Don’t Get the Whole Story
In any type of negotiation, knowledge is power. Strengthen your position by plying the listing agent for details. Is there an urgent reason why the sellers are moving? Are they hoping to sign a deal for their new place? Get the scoop so you can open negotiations with your smartest bid.
You Use an Inexperienced Agent
In a tight market, buyers need a power player on their side. Choose a buyer’s agent with deep knowledge of the town and its neighborhoods, and ask how many successful sales the agent has closed for buyers in the last two years. Get references, and be sure to check them.
You Lose the Big Picture
In locations where bidding wars are common and pleasing properties are in short supply, don't present the seller with a lengthy list of nitpicky fixes. Remember, you want the property. If the porch railing seems wobbly or the basement steps could use a coat of paint, hold your tongue on these little problems and let the larger issues wait until the inspection phase.
You Fixate on One House
In this age of hotly contested real estate, you may lose out on what seemed to be your dream home. That's a risk you have to take in a seller's market. As you're bidding and negotiating, keep an open mind and continue to search for other offerings that might work for you. If a deal doesn’t pan out, you'll be primed to move on to other appealing properties rather than dwell on the one that got away.
You Don’t Know the Art of Negotiation
Negotiating is, by definition, a give-and-take process. When you submit your bid and requests to the seller, include a few items you can easily and graciously concede. Being inflexible and unpleasant is the quickest way to torpedo the transaction, so be prepared to compromise in order to win the big prize: a done deal on an amazing new home.