In the current real estate market, buyer’s can be at a disadvantage due to the low level of inventory and competition from other buyers. To get what you want you need to know how to put yourself in the best possible position for when you find the property that you want to buy.
Getting an advantage in the current market is dependent upon three things: 1) your certainty and your ability to make decisions, 2) fast and strategic actions and 3) a team of professionals who know how to and can get results.
Your Certainty and Your Ability to Make Decisions
One of the most important factors in being successful as a buyer is having a clear understanding of what it is that you really want. If you were to go on a trip how would you know when you arrived at your destination if you didn’t know where you were going when you left? The same is true for buying a home, condo or townhouse.
I hear some clients say they will know they have found the right place when they see it, only to later have them tell me that they should have bought the house/condo/townhouse they saw last week or last month (which is now under contract).
This is more common than you might think. Sometimes it comes from a failure to have fully determined what they want and sometimes it comes from uncertainty about being ready to buy something now. Indecisiveness and the resultant delays of action are two of the biggest barriers to buyer success that I have seen.
After going through this with too many of my clients, I have now implemented a procedure to help buyers gain certainty about whether they should or should not buy now and then, for those who decide they should buy now, help them gain certainty on what they really want so that they can decide and act faster and easier. I developed this one-on-one procedure using a tool I was shown at the conference in Austin I attended in July that has very precise steps which help you come to a decision and have certainty on it as well as lay out exactly what it is that you want.
In addition to having certainty on what you want to get, you will need to have certainty on what you can afford and how you will pay for it. For cash buyers this isn’t quite as involved but for buyers getting financing this is important to work out since it often is the key point in determining whether you get what you want.
There are many examples I could give here about indecisiveness resulting in a lost deal I’d rather give a more positive example of how it can work for someone who has certainty about what they want.
A past client was coming here to look at houses and was sent a listing for a house not on their list the day before they were coming. From the description and pictures it looked like everything they wanted. When I called to schedule the appointment, the listing agent told me they already had an offer (first day on the market) and the owners would be deciding on whether to accept it by the next afternoon so I scheduled the appointment for early afternoon the next day and told my client to bring their bank statement to show they had the cash to purchase it in case they wanted to put in an offer.
We saw the house at 1pm and it was exactly what they wanted and, in addition to that, was priced very well. I contacted the listing agent and she said they had 2 other offers on the house and she was meeting with them at 3:30pm to go over the offers. My clients and I went right to my office and discussed how to put in an offer that would get them the house, put the offer together and I emailed it to the listing agent at 3:10pm. She called me back at 4:40pm to clarify something on our offer and then at about 5pm called back to tell me that the sellers chose my clients offer because it was a very strong offer. There was one additional document she wanted added and I got the paperwork back at about 6pm and drove to see my clients to get their initials on that last document and then drove back and emailed it to the listing agent and so at 7:30pm the house was officially under contract.
This client’s ability to make decisions quickly because they had certainty on what they wanted gave them an ability to act quickly when needed and resulted in them getting exactly what they wanted.
Fast and Strategic Actions
Having certainty on what you want and certainty on the financing of your purchase are important and will allow you to both act and make decisions faster, but you still have to make those decisions and take those actions. When the uncertainty is eliminated, delays in making decisions or taking action can come from the need to consult with someone like a spouse or parent, or from a fear that you may make a mistake.
The fear of making a mistake typically comes from a past bad experience and is understandable. But if you have really done the first step of establishing certainty on what you want and the financing you will be able to make a decision correctly and without it having to take a lot of time. At that point it has more to do with pushing past the fear reaction than anything else.
If there is someone who you would need to consult with on the purchase, it is best to plan for this in advance so that when fast action is needed that it won’t become a barrier. In the example I gave above, both husband and wife were here to see the house so that made it much easier. But in the case where one of the people involved in the decision isn’t going to be present or isn’t available – there should be a plan in place in advance as to what should be done if a decision will need to be made. Not all situations will require a decision and action as quickly as the example in the above section but it is always good to have a plan in place so that decisions and actions can be completed within the timeframe that is necessary.
In addition the speed of action there is also a need for strategy of actions taken. Getting an offer in quickly enough does not guarantee that a buyer will accept it; working out how to present an offer that the seller will want to choose while at the same time making sure it gets you the best deal requires the right strategy. This is vitally important especially when there are competing offers.
I used this in the example above and in another situation a few months ago where there were 4 offers being considered by a seller.
We saw the house on the Friday before Memorial Day weekend and the sellers were out of town until Monday. My client knew what they wanted and had their financing worked out (they even had a loan commitment letter rather than just a preapproval, which is a much stronger position to be in) so they were able to decide quickly and act quickly. Since we had until Monday we didn’t have to rush to get the offer in the same day and so we worked out a strategy for making their offer the most enticing to the sellers. This involved my preparing a cover letter with a photo of my clients and their two young children which would help the sellers see who they were and I added a touch of humor to make it more memorable. In addition, I worked with my client on the price to offer (above asking price since the property was priced below its actual value) and the terms of the offer that would make it very strong.
My client’s offer was accepted over a cash offer that had a contingency of the sale of that buyer’s home and two other offers with financing including one at a higher price than ours. The seller’s agent told me that the sellers loved the cover letter but that the terms of our offer made it stronger than any of the others including the one that offered a higher sale price. And even though the offer was above list price it was still below what the home appraised for. This was an example where there was a need to act quickly (within 1-2 days) but where the strategy was the key to being the winning offer.
A Team of Professionals That Know How To and Can Get Results
There are good real estate agents and mortgage brokers and there are also ones who either don’t really know what they are doing or don’t really provide a level of service and caring for their clients that are even close to being acceptable.
The outcome of a purchase is not only dependent on the buyer and seller but also the buyer’s real estate agent, the seller’s real estate agent, the loan officer or mortgage broker when financing is involved, the home inspector, the title company, etc. Whether the deal has a successful outcome and goes as smoothly as possible really rests on the shoulders of your real estate agent and your mortgage broker or loan officer – in other words, your team.
There are hundreds of tasks that have to be completed to have a successful purchase and when you have incompetent people in any of the key positions you can end up either with an unsuccessful purchase or a painful and stressful purchase process. You and the people on your team will determine which way it will go, so choosing your agent and your mortgage broker/loan officer correctly is a vital step and you should make sure that you choose people who are real professionals at what they do not just someone who is nice, or funny, or someone you know or have heard of from a friend or relative.
There are many, many examples I have personally seen or heard about from others where one or another of the people involved in a deal did not do their job as they should have which then either resulted in a deal that didn’t close or was painful to go through. The bottom line is – if you have a real professional for your real estate agent and/or mortgage broker they will do everything necessary and possible to get the deal done and to make it go with the least stress to you as possible.
In a recent deal, the title company that was involved had concerns over 2 judgments against one of the owners and did not want to close until those were cleared up. The seller settled both judgments and provided proof that they were paid and the title company even confirmed with the attorney offices this was true and got the notarized paperwork showing they were settled. But they were still unwilling to close and I had to contact another title company to find out if this was correct or not. Based on the information from the 2nd title company I was able to get the first title company to agree to close by the extended closing date and not risk losing the buyer. Needless to say I will make sure to work with the 2nd title company from now on.
A professional will not ask ‘Can I?’ but rather will ask ‘How Can I?’. That’s what you need on your team.