Seven Tips on Successfully Buying Your Dream House
By Tanya Marchiol
1. Be preapproved: About three or four months before homebuyers even shop for a home, they should review their credit reports to make sure they're accurate and take short-term steps to improve their credit score, says Michael Corbett, author of “Before You Buy!” Corbett says buyers should then get a bank's preapproval. While that won't guarantee they'll get the loan, it shows sellers that a lender has verified the buyer's income and credit score to determine that he or she can afford payments on a mortgage for a certain amount.
2. Don't lowball: Buyers may only get one chance to get the home they want in a competitive market. They may not get a second try to sweeten the deal later, so a low-ball offer the first time around could cause them to lose out. Buyers should use sales prices of comparable properties in the neighborhood to submit their best offer the first time around.
3. Consider an escalator clause: These purchase contract clauses are becoming more popular again. This is when the buyer agrees to increase their offer if there's a higher bid from another buyer.
4. Add earnest money: The extra deposit can show sellers how serious the buyer is. Some buyers may even double the amount that the seller requests to show their commitment in purchasing the home.
5. Keep contingencies to a minimum: Sellers prefer no contingencies, but buyers want to protect their interests too. "Offset a financing contingency with preapproval and a strong earnest money deposit," Kiplinger's Personal Finance reports. "If you have enough cash, temper an appraisal contingency by assuring sellers that if the appraisal comes in lower than the purchase price, you'll pay the difference or split it with them (up to a certain amount)."
6. Write a letter: Personal love letters about the home addressed to the sellers are winning over some hearts lately. The letters tell the seller about the buyer and what drew the buyer to the home.
7. Give the gift of time: Express your willingness to work with the sellers' timetable to go to closing. If the sellers want to remain in the home for a while after closing, offer them a "lease back" or "rent back," which means that you will be their temporary landlord. This is a legal arrangement, and you'll need to work out the details with your agents and be sure that the sellers keep their homeowners insurance during their stay. If you are bidding on a short sale, make clear to the sellers that you are patient and can wait for the bank's decision .
Tanya Marchiol has appeared on CNBC, Fox Business News & Wall Street Journal is Author of the new book "The Prosperity Principles." In 2013, Arizona Business Magazine named Marchiol "Realtor Of The Year."