I Want to Buy a House. What is the Right Order of Things? And Does Chronology Really Matter? Part II
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.
Last month we discussed the first few steps, this month we continue.
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
How Should I Shop for Housing?
If you live in a house you need to sell, get it on the market immediately. You DO NOT want to write an offer contingent on your sale. That is a needlessly-weakened offer. Get on the market, price it like you’re serious about moving, and time the two closings so that you only have to move once.
If you are renting, decide whether you’re going to time your purchase with the termination of your lease. Florida Landlord-Tenant law is very strongly in favor of the landlord, so do not skip out on your lease and expect your last month’s rent or damage deposit returned.
Before shopping, ask yourself: If I find the home of my dreams, will I buy it?
If the answer is anything other than an emphatic yes, it is a no. If the answer is no, you try to figure out why before going shopping. For example, “Yes, I’d buy my dream home, but only if I can get it for 10% under market value.” That is not a yes. Instead, that is a not-so-flushed-out attempt at being an investor. Make sure you get to yes before you go shopping. Having your agent talk you through it is a good idea.
Use the Rule of 20
- Get your dream home search down to about 5 or 10 properties. Then, plan on going shopping 2, 3, or 4 times. Anything more than that is going to be very taxing.
- Think about it in this context: Once you find the home you want, the process has now just started. You don’t want to spend months or years not-even-starting with this process.
- We are on step 3 of 8.
- Try to keep your home search to around 20 properties. If you’ve looked at 40 properties, go back to step 2, and ask yourself which of those 6 pre-qualifying questions you’ve not yet answered clearly.
How Do I Write a Good Offer?
In short: Have a good agent. More specifically, your agent should not take the seller’s word for it, regarding value. Make sure your agent does a CMA (Competitive Market Analysis), to find the true value. Write an offer somewhere in the realm of that value.
Keep in mind that the seller owes you almost nothing. Housing discrimination law protects a buyer only from discrimination for the following:
- National Origin
- Familial Status (kids)
That’s it. ALL other discrimination is perfectly legal! In other words, the seller rejects your offer, stating, “This buyer has a horrible attitude, writes insulting offers, and is using a government-insured loan. Tell them never to talk to me again.” Nearly every word of that statement is discriminatory. However, attitude, perceived bad manners, and use of FHA loans are not protected classes. The statement would be discriminatory, and also perfectly legal. The buyer would not be buying that home, and would have nowhere to turn.
The next step would be going back to step 3. With your agent’s help, write a good offer.
What Are the Last Steps?
- Make Sure Your Agent Gets the Docs to the Right Places
- Remove Contingencies
Your agent, your lender, and your title company will collectively take you through these last steps.
So, What’s the Bottom Line?
The order in which you complete the first four of these eight steps is imperative. It will be the difference between a long, frustrating, failing effort, and a smooth transition into your new home.
The last four steps will naturally occur in the right order, when the first four are taken in the right order.
A good lender, and a good agent, will require you to go through each of these steps. And, if they are allowing you to go through these steps in a different order, it’s worth asking yourself who’s wasting the time and energy of whom.
And that’s the bottom line.