I Want to Buy a House. What is the Right Order of Things? And Does Chronology Really Matter? Part I
When you decide to buy a home, whether it’s your first or your one-hundredth, it is vitally important to do things in the right order. Failing to do so can, potentially, lead to disappointment and disaster. But usually it just leads to an unquantifiable, giant waste of time and energy.
What is the Best Time-Conscious Order of Things When Buying a House?
- Get Pre-Approved with a Lender
- Get Pre-Qualified with an Agent
- Go Shopping
- Write a Good Offer
- Make Sure Your Agents Gets the Docs to the Right Places
- Remove Contingencies
What Does it Mean to Get Pre-Approved with a Lender?
You need a letter. The letter will state that you ‘may or may not’ qualify for some dollar amount in mortgage funding. It will be vague language, but it is going to be required by any decent listing agent. It will be delivered to them at the time of writing your offer to buy.
You can get a pre-approval letter from anybody, but it will usually be your bank, or a mortgage company. The letter in no way binds you to that lender. However, if no lender will give you a letter, you’re not ready to buy.
This Cannot Be Overstated: There is absolutely NO REASON to go shopping for housing if no lender will give you a pre-approval letter. The only caveat would be that you have enough cash to buy, and you can prove it to a seller. Again, ‘cash’ is the only caveat. No letter, No cash = No Shopping. And any buyer’s agent worth their salt will not take you shopping without that letter, or proof of cash.
Adherence to this knowledge, alone, could save untold hours spent by agents on the MLS, and buyers on Realtor.com, Zillow, and the like.
Do not violate this first step. It is a complete waste of time to violate this first step.
The odd thing about the real estate industry is that – for some reason – people understand that they cannot buy a $250,000 Lamborghini if they have no credit, no job, and no money. However, they seem to think they can buy a $250,000 house.
Perhaps we can partially blame Countrywide, and Leman Brothers, for their ‘no doc’ loans, but this shopping-for-homes-we-cannot-afford phenomenon is as old as the industry.
What Does it Mean to Get Pre-Approved with an Agent?
Florida is a Transaction Broker state. This means that any agent you speak with, unless you sign a document stating otherwise, represents the transaction, and not the buyer or seller. This means that you could go directly to a listing agent, for example, and they would not be able to use your conversation against you when they talk to their seller.
The reality, though, is that you can work with any agent you’d like. At any given time, there are about 18,000 – 20,000 licensed Sales Associates (commonly referred to as agents, or Realtors) in SWFL, and around 2000 of them are licensed Brokers.
As long as they are both licensed (as a Sales Associate or Broker), and a Realtor (a member of the National, Florida, and some local Association(s) of Realtors) they’ll be able to get you into properties, and help you write an offer.
That agent should ask you: Who? What? Why? Where? When? How?
The more precise you are in your answers, the better they’ll be able to assist you.
Think of it like going into Lowe’s and saying, “Do you have paint?” The answer is, “Yes.” Then, they take you to the paint aisle, and then you stare at row-after-row-after-row of paint you will never buy.
Instead, you say, “Do you have a ¼ gallon of matte D11 sky blue?” Obviously, you will get a much more exacting answer.
Check back next month for the next steps you need to take if you are looking to buy