Want to Buy A Home? Get Pre-Approved First!

If you've read my other blog postings you'll see that there is an order of things with regards to purchasing a home.  You need to get your ducks in a row.  And, to quote an old standby, you shouldn't go off half-cocked.

My last posting talked about finding a agent before trying to find a home.  Are you with me so far?  What's next?  Start looking at homes?  Absolutely not!  The next thing you need to do, unequivocally, is to find a good mortgage lender and get pre-approved!

One would think this be obvious.  Why would anybody look at homes (or anything, for that matter) if

they don't have enough money, or don't have any money?  This is not just about common sense, mind you.  It's about getting yourself in a position to be able to move on a property when you find what you want.  It's about being strategic in your quest to find a home and making sure you are in a position to actually buy the home you want when you find it.

There are several reasons why you should be pre-approved by a qualified lender before you look at homes.  What are they?

1. You know you are able to purchase a home.  There is little doubt that you will get final approval from a lender if you are able to get a pre-approval.

2.  You will know what you can afford.  Do you want to spend a bunch if time looking at homes that you cannot afford?  I can assure you, your agent does not want to show you homes that are out of your price range.  You time is valuable and so is your agent's.

3.  You look like a ready, professional buyer when you make an offer.  What's the seller's biggest fear with most buyers?  That they won't offer enough?  No.  A seller's greatest fear is that you won't get approved for a loan.  A pre-approval removes almost all doubt from even the most fearful seller.

4.  If you are in a bidding war with another buyer who does NOT have a pre-approval which offer do you think the seller will take?  This one is obvious.  If you don't think this is true go make an offer on a property against another buyer who has a certified, valid pre-approval.  You will loose.

 5. Being pre-approved gives you more flexibility on the closing date.  Why is this important?  Because if the seller wants to close in (3) weeks and you aren't pre-approved it probably ain't gonna happen.  So will the seller kick your offer to the curb?  Most likely.

Do yourself a favor if you are considering buying a home: get pre-approved.  It usually doesn't cost anything and many lender can do it over the phone.  What possible reason could you  have for not doing so?

One last thing:  don't confuse the terms "pre-approval" and "pre-qualification."  Pre-approval is what you are looking for. Pre-qualification isn't worth the paper it's written on.

Good luck, and as always, happy hunting!

    

I Just Want to Look at Homes

It never fails.  I constantly get e-mails and phone calls from people who "want to look at homes" - or want to look at a specific home - right now.  A potential buyer will see a home on a particular website, or driving down the street and call me or e-mail me and say, "Hi, my name is John.  I saw a home on ABC website.  I want to see it.  When can you show it to me?"  That's typically how the conversation starts.  Every agent's dream, right?  A hot-to-trot buyer, ready to go, already has a home picked out.  Not so fast....

Some buyers need to be educated.  Most that contact me in the above manner do not understand how the process works.  It's not as simple as "I'm a buyer, there's a house, show it to me."  If, in fact, you are a buyer who "just wants to see houses" then you need to find an agent who "just shows houses."  In that case, I am not the right agent for you.  Let me explain.

Don't I show houses to people?  Isn't that what I do?  Why can't I just "show you a house?"  Well, I could.  But I prefer not to.  Why?  Because you probably aren't ready to buy a house.  Are you pre-approved with a lender?  Have you established a relationship with your "own" agent, or are you randomly calling agents?  Do you even know what you can afford?  Do you understand the steps in the process of buying a home?    If you answered "no" to any of these questions, you are not ready to buy a home, and therefore, shouldn't be actually looking at homes in person (vs. browsing on the Internet or driving around).

I realize that it's easy to get excited when you are window shopping.  Many people window shop for things when they are not quite ready to purchase.  And there are lots of websites out there that have homes for sale.  I'm not trying to kill the American Dream here, or trying to burst your bubble.    But buying a home is different from, say, buying a big screen t.v. or buying a car.  You can't learn the ins-and-outs of buying a home on line.  You can't research specific homes because every home is unique, vs. finding a certain t.v., finding the place where it has the best price, and just going a buying it.  Buying a home is different.  You really need to understand the process before you start looking at homes.  It can be complicated and treacherous if you do not know what you are doing.  There are many mistakes that first-time buyers have made that they have regretted later: mistakes that have cost them time, money, and even the home of their dreams.  I know, there are plenty of agents who will "just show you homes" if that is all you want.  Just make a few calls, you will find them pretty easily.  Not to mention the fact that if you're just calling on listings on a website that some of the agents you are calling are working for the seller, and not for you.  But that's another story (see my previous blog postings).

Most agents are salespeople.  You want to "buy" a home.  They will "sell it to you."  Great, deal done.  Or is it?

I don't "sell homes," I educate people on how to buy homes.  I give them the tools they need so that they can make an informed decision when the time comes.  I take them through the process from A to Z in the very beginning, before we even look at a single home.  I give my clients an edge that other buyers don't have because I lay the foundation upon which everything else will be built.  My clients are savvy, educated and informed.  They come to me looking for someone who will educate them and guide them through the process of buying (or building) a home.  I am their guide, counselor and instructor.  And I am their advocate.

So, going back to my description in the first paragraph, I have a real challenge.  When I get calls and e-mails from people who are hot-to-trot I try to ask a few relevant questions and see if I can guide them back to a starting point, one that they have missed.  The first thing I ask them is if they are pre-approved with a lender.  If they are not, back to square one.  Why would you consider looking at a home if you are not even pre-approved?  No seller would ever see you as a serious buyer.  And frankly, neither would any agent worth their salt.  Regardless if a potential buyer is pre-approved, or not, my first goal is to get them to meet with me so we can go through the process and make sure they are in the best position to buy a home.  And if they say "no" and "well, I really just want to see this home"  that is usually the end of the conversation if I can't get them to come in and meet with me first.  At that point I know, for the most part, that they are not serious buyers.  If they can't spend an hour of their time learning about the most important financial transaction of their life then I really don't have time for them.  And they usually don't seem to mind.  They can always find an agent, one not like me, who will just "show them homes." 

So, if you are considering buying a home get your ducks in a row!  Become an educated and informed buyer first and you will be in the best position to buy the best home for you at the right time.