Home Buying Tips, 2010

It was asked yesterday how to go about finding deals like the ones LGS has purchased.

The search is agonizing because you’e looking at all the leftovers that have been picked over by everyone else. The good ones go quick, and it’s tough to keep your chops up.

Some basic tips:

1. Narrow down the search to specific areas. Start small, and be an expert in a couple of areas.

2. Be on an auto-notification program. Get an email alert when the hot buys first go on the MLS – if you are dependent on manual searching, other buyers are going to get a head start on you.

3. Examine the pending and sold listings. Tracking the actual deals keeps it real.

4. Dig through old active listings. Any seller who has been on the market for more than 30 days hasn’t had many showings lately, and after 90 days it’s a ghost town. Lowball at will.

5. See in person as many properties as possible. Having ample experience is invaluable when the right house comes up, and you have to make quick decisions.

6. Win the bidding war. Multiple offers usually only happen the first week on the market, but they’re also possible after a significant price reduction. You have no obligation for 17 days, tie up the property and get your answers later. Clean offers with big deposits and down payments get preference.

7. Omit the loan contingency. This is a little risky, but if you are a strong qualifier and get your loan package pre-approved, leaving out the loan contingency can keep you in the running with cash offers. You still have the appraisal and inspection contingencies to fall back on, if needed.

8. Include ‘as-is’ verbiage. The contracts already state that the property is sold “as-is”, but including it again might help in a close race. Once you inspect the property you might change your mind, but the seller is never obligated to fix anything, anyway.

9. Determine the ideal occupancy arrangement. Particularly important on short sales, because it’s the most important ingredient to the sellers.

10. Run into the sellers. Say as little as possible, just ask friendly questions and shower with compliments without over-doing it. A little rapport could make a difference in a close race, or on that last counter-offer.

11. Rely on your agent. Good agents have valuable insights. You might prepare for months or years to find the right house to buy, but when the opportunity comes, you might have to act quickly. Having expertise available in that moment might make the difference.

11 Comments

JP2 on June 6, 2010 at 9:10 am

12. Go earn an MBA at a decent school, and if you are not able to enroll in MBA classes, start with some business classes at your local community college.

I had a friend lose about $250k, and I am confident that would have been avoided had she spent the cash to earn an MBA. Even if she would have spent $50k on the MBA, she would have “saved” $200k, by my computation.

tj & the bear on June 6, 2010 at 10:28 am

Actually, #11 should’ve been “Get a great agent” (like JtR) so that #12 could be “Rely on your agent”. 🙂

JP2 on June 6, 2010 at 11:38 am

#11 get educated on how to select a great agent.
#12 get a great agent.
#13 rely on your agent.

tj & the bear on June 6, 2010 at 2:54 pm

JP2,

Better! But, upon further thought, those should be #1, #2 and #3 (since a great agent would help with the rest).

W.C. Varones on June 7, 2010 at 5:13 am

JP2,

Mortgage debt is like a summer romance: if it doesn’t work out, you can walk away.

Education debt is like herpes: it’s forever.

Charlene on June 7, 2010 at 8:41 am

Words of wisdom. Thanks for this post.

ElizabethL on June 7, 2010 at 8:43 am

#11 Absolutely!! Great agents are the key to a successful purchase!

JP2 on June 7, 2010 at 8:50 am

W.C. Varones- Start with the cash buyer, and then let’s work to capital structures.

(A good bankruptcy attorney can, under the right conditions, get the student loan debt discharged, but it takes the right conditions.)

clearfund on June 7, 2010 at 10:40 am

Why should student debt ever get erased?

If you default on your home mtg they can take your home away.

If you default on your student loan, they can never take your education away. Thus you can always use that education to earn more $$.

Now, that’s assuming you used your student loan for an education and not drinking and spring break!

osidebuyer on June 7, 2010 at 11:39 am

If I remember correctly Jim has compiled several lists on how to select an agent. Hey Jim, is there a way you can add search functionality to the site for the public, or is that intentionally restricted?