March 8th, 2016 9:35 PM by Debo Cornett
BUYER DO’S AND DON’TS
Whether you’re looking to purchase your first home or fiftieth home, the process is ever changing and it’s your Personal Buyer’s Agent’s job to make you aware of those changes and how they may affect your home buying process. Keep this list with you as you proceed with your home buying process, particularly at the beginning, as I find that’s where many of the buyer mistakes are made. So let’s get started on the best foot possible, and look at what you SHOULD DO as well as what you SHOULD NOT DO.
BUYER DØ NØTS
DO get your loan process started before looking at properties. How do you know how much house you can actually afford to buy unless you’ve been PRE-QUALIFIED/PRE-APPROVED by a mortgage lender? This will require answering some questions about your current income and debt situation as well as your credit standing with the credit bureaus. You may find you can actually afford a lot more house than you realized. You can also find out your limitations, which are equally important. If you're limited to a loan amount of $100,000, there is absolutely NO reason for you to be looking at $150,000 and up. Likely you’ll fall in love with a house you can’t buy and that is painful. Putting the loan process in front of the "looking" process prevents this from happening. If you’re not paying cash, choosing your lender is a very important step as they drive the process. If you’re not sure where to start, contact your Personal Buyer’s Agent. They’ll have lots of options for you, resulting from their experience with previous buyers and their lenders. Sellers expect Buyers to be able to purchase their properties before seeing them. Imagine you’re in their position. You work every day, have children’s dinners to prepare and homework to get done, and a Buyer has asked to see your property. You do extra cleaning, get the kids in the car and head for a restaurant for supper hoping the buyer who’s looking at your house will will be "the one". When you get back, you ask your listing agent “what did they think?” They say, “they loved it, but they can’t afford it”. Well, likely your next question is, “Why did you put me and my family through this for someone who wasn't even able to buy my house?” Get the picture?
DØ NØT expect Agents to show you houses without the knowledge of what price range you can afford. I often have Buyers tell me “I called ….and they wouldn’t show me a house because I haven’t been pre-qualified. Well, my policy on this is, I’ll show you one vacant house before you’re pre-qualified. That will give us time to get to know each other and know if we're a good fit. But to clarify the reason that Agent likely didn't want to commit to showing you the property, is because you hadn't committed to the process. Real estate Agents are in the business of helping SERIOUS BUYERS find the home of their dreams. SERIOUS BUYERS have done their homework and are confirmed to be financially ready to get on with their home search and purchase. If Agents spend their time with everybody who’s curious about a property, how will they have time to help their SERIOUS BUYERS? They can’t. So in order to serve their Clients to the best of their ability, they often have to limit their client numbers and that’s one of the first ways they do it. More importantly, you need a Seller to take you seriously, and that's what your Agent does when they make an appointment to show a property and note that you are a Pre-Qualified/Approved Buyer in this property's price range. That’s why I qualified the one home I’ll show you is vacant. Then, if it turns out you’re not ready, a Seller hasn't been put out by preparing their home for a showing and leaving while we were there. Sellers expect potential Buyers looking at their properties to be pre-qualified by a lender to purchase a home in their price range. Otherwise, why should they get everything ready and leave the house for the showing? You don’t like to have your time wasted. Sellers, Agents and their Buyers can't afford to.
DO start watching every penny you spend. You’re about to make likely one of the largest purchases of your life up to now – your new home. Your lender will have to verify you have the ability, experience and habit of saving money so you can always be prepared to make your monthly mortgage payment. A good rule of thumb is to always have a minimum on 6 months of mortgage payments set aside for emergencies. This will be a plus if a lender sees this. If your lender suggests doing something with your credit, get it done yesterday. It's IMPORTANT!
DØ NØT use your available credit. Once you have an offer on a property, you have to be very careful with your finances. Just before closing, your lender will do a final check of your credit and they’ll expect to get NO SURPRISES since they initially checked it at the beginning of your loan process. If they do, you may have an issue with closing. I've seen closings never happen as a result of a Buyer making a big purchase just before closing. This is not the time to buy furniture, cars, boats, etc. If you want to buy new appliances and furniture, do it AFTER you close.
DO pick a Personal Buyer’s Agent to help you each step of the process. Choosing your Buyer’s Agent is a very important step to moving into your new home. They will be working on your behalf each step of the buying process. They will be representing YOUR best interests, just like the Listing Agent represents the Seller. You may find your Buyer Agent at an Open House, in an ad, or as a suggestion from a friend or relative who previously worked with them. Make sure you choose an Agent who has experience, training and education to best serve your needs. Check to see if they have initials after their name verifying they've gone the extra mile to get additional, unrequired training for no reason other than to best serve all their clients. Make sure you can see feedback from previous buyers. Make sure they're very knowledgeable of their market conditions and trends. Make sure they're interested in you and your needs. In other words, it needs to be a good fit. You don't have to be best friends, but they need to demonstrate a desire to make your home needs a priority. The Buyer Agency Agreement should be signed early in the process to enter into a fiduciary relationship with your Agent, meaning they are working FOR YOUR BEST INTERESTS. Having your Personal Buyer’s Agent will also save you a lot of time. When you have questions – one call to your Buyer’s Agent. When you see properties that interest you, - one call to your Buyer’s Agent. They’ll get all the info to you, make all the appointments to see properties, advise you on all aspects of the process and much more.
DØ NØT call every number you see on a yard sign or ad. Most often this is the Listing Agent and they are working FOR THE SELLER. They may show you the property and give you needed information on it, BUT they are working FOR THE SELLER. They have the ability to work in Dual Agency, allowing them to work with both the Seller and the Buyer. But in that situation, they are not able to advise either party because they know too much about both sides. This can be very workable with a savvy Buyer, but I strongly suggest that first time buyers seek their own representation so they can get the advice they need on every aspect of the transaction. It’s not that the Listing Agent doesn’t want to help the Buyer, or is in any way not qualified. The issue is their initial allegiance is to the SELLER, verified in writing through the Listing Agreement. So in an Open House conducted by the Listing Agent, or if you call the Listing Agent and ask them to show you the property, remember not to say anything to them that you wouldn’t say to the Seller, as they are obligated to share anything and everything with the Seller, UNLESS you sign a Dual Agency Agreement with them. At that point, their lips are sealed to BOTH parties AND they cannot advise either party. That's the "rub" - no advice. At that point, they're operating as the “middle man” moving the process along to closing. They can provide all material facts on the property to each side, but they cannot advise either.
DO be diligent to get things to your lender quickly. Your lender is working on many closings for many buyers at the same time. So if they ask you to get something to them, always do your best to get it to them quickly. Make them see that you're a serious buyer and you intend to close on this loan. Often your lender will ask for additional pay stubs or tax returns. Know where these are and take them with you when you first meet with your lender after the Sales Contract for your new home has been signed. Having these in advance could save a lot of time at the end, when things can get very hectic.
DØ NØT take for granted your loan will go through without a hitch. I say this not to frighten you, but to prepare you for the unexpected. In today’s real estate and mortgage market, loan underwriter requirements can be tough. This is mostly a result of the many loan defaults of a few years ago. Lenders want to make very sure that every loan they approve as an asset will not come back to them later as a foreclosure and a liability. Even though most closings go through, and Buyers move into their new homes, seldom do they go from contract to closing without a little hitch. Remember, you have professionals working on your behalf - professional problem solvers. We all just need to stay diligent and flexible and the next thing you'll hear is "Welcome home!"