5 Secrets to Buying the Best House for Your Money

1. Get “Pre-Approved” – Not “Pre-Qualified!”
Do you want to get the best property you can for the least amount of money? Then make sure you are in the strongest negotiating position possible. Price is only one element in the negotiations, and not necessarily the most important one. Often other terms, such as the strength of the buyer or the length of escrow, are critical to a seller.

In years past, I always recommended that buyers get “pre-qualified” by a lender. This means that you spend a few minutes on the phone with a lender who asks you a few questions. Based on the answers, the lender pronounces you “pre-qualified” and issues a certificate that you can show to a seller. However, sellers are aware that such certificates are essentially WORTHLESS, because none of the information has been verified!

In order to make the strongest offer today, I recommend getting “pre-approved”. This happens AFTER all information has been checked and verified. You are actually APPROVED for the loan and the only loose end is the appraisal on the property. This process takes anywhere from a few days to a few weeks depending on your situation. It’s VERY POWERFUL, and it's a weapon I recommend that all of my clients have in their negotiating arsenal.

2. Sell Your Property First, Then Buy the House
If you have a house to sell, sell it before selecting a house to buy! A contingency sale isn’t nearly as strong as one that comes with a willing and able buyer.

Consider this scenario: You’ve found the perfect house and now you want to make an offer to the seller. You want the seller to reduce the price and wait until you sell your house, but the seller is viewing this as a risky deal, since he might pass up a buyer who DOESN’T have to to sell a house while he’s waiting for you. So he says OK, he’ll do the contingency but it has to be a full-price offer! You have now paid more for the house than you could have because of the contingency, and you have to sell your existing house in a hurry, or you lose your dream house! In order to sell quickly, you might take an offer that’s lower than what you would have accepted without a looming deadline. The bottom line is that buying before selling might cost you THOUSANDS of dollars.

If you’re concerned that there is not a house on the market for you, then go on a window-shopping trip. You can identify possible houses and locations without falling in love with a specific house. If you feel confident after that, then put your house on the market.

Another tactic is to make your home sale "subject to seller finding suitable housing". Adding this phrase to the listing means that if you do find a buyer, you will still have some time to find a new place. If you don’t find anything to your liking, you don’t have to sell your current home.>

3. Play the Game of Nines
Before house-hunting, make a list of things you want in the new place. Then make a list of the things you don’t want. You can use this list as a guide to rate each property that you see. The one with the biggest score wins! This helps to avoid confusion, and keeps things in perspective when you’re comparing dozens of homes.

\When house-hunting, keep in mind the difference between "style" and "substance". SUBSTANCE represents the things that cannot be changed, such as the location, view, size of lot, noise in the area, school district, and floor plan. The STYLE represents the elements that can be easily changed, like carpet, wallpaper, color, and window coverings. Buy the house with good SUBSTANCE, because the STYLE can always be changed to match your tastes. I always recommend that you imagine each house as if it were vacant.

Consider each house on its underlying merits, not the seller’s decorating skills.

4. Don’t Be Pushed Into Any House
Your agent should show you everything available that meets your requirements. Don’t make a decision on a house until you feel that you’ve seen enough to pick the best one.

A decade ago, homes were selling quickly (usually a few days after listing.) In that kind of market, agents advised their clients to make an offer ON THE SPOT if they liked the house. That was good advice at the time. This sense of urgency is more rare today, unless a home is drastically underpriced - and you’ll know if it is.

Don’t forget to check the school districts of the area you’re considering. Information is available on every school, such as class sizes, % of students that go on to college, SAT scores, etc., and you should be able to find it easily online.

5. Stop Calling Ads!
Please note – ads are often created to make the phone ring! Many of the homes have some drawback that’s not mentioned in the ad, such as traffic noise, power lines, or litigation in the community. What’s NOT mentioned in the ad is usually more important than what is.

For this reason, I want you to be very careful when reading ads. Remember that the person writing the ad is representing the seller and not you! The most important thing you can do is have someone on your side looking out for your best interests. Your own agent will critique the property with an eye towards how well it meets your needs, and will point out any drawbacks you should know about.

So pick an agent you feel comfortable with, and enlist the services of that agent as a buyer’s broker. Then you become a client with all the rights, benefits, and privileges created by this agency relationship, and you’re no longer just a shopper. Did you know that many homes are sold WITHOUT A SIGN ever going up or an ad ever being put in the paper? These “great deals” go to those people who are committed to working with one agent. When an agent hears of a great buy, who do you think he or she will call? A good agent will contact his or her client first, rather than someone who just called on the phone and said “keep your eyes open." So to get the best buy on a property, I always recommend that you hire your own agent and stick with him or her.