Eight Simple Steps to Buying a Home For Thousands of Dollars Below Fair Market Value

1. Don't Get Prequalified, Obtain a Written Preapproval

To buy a home for below fair market value, you need to put yourself in the strongest negotiating position possible.  Offering price is only one bargaining chip in the negotiations – and not necessarily the most important one.  Often other terms, such as the strength of the buyer, conditions or the length of escrow are of critical concern to a seller.

Today many buyers obtain over-the-phone prequalification from a Lender.  They spend a few minutes on the phone with a Lender who asks a few questions.  Based on the answers, the Lender issues a “prequalification certificate.”  These certificates are nonbinding on the Lender, and are not worth the paper they’re printed on, because none of the information has been verified and numerous problems can (and often do) surface before a loan is approved. 

A written preapproval, however, is virtually as powerful as cash, because all of your financial information has been verified by the Lender who issues a written commitment.  That commitment is proof that you have been approved for the loan, subject to the property appraisal.  A prequalification letter is a very powerful weapon that I recommend all of my clients have in their negotiating arsenal.

2. Play The Game of Nines

Before house hunting, make a list of nine things you want.  Then list nine things you don't want.  I call this The Game of Nines.  Use this list as a scorecard to rate every property you visit.  After viewing more than ten properties, you’ll be surprised at how this simple “game” helps clear your thinking. 

3.  Recognize the Difference Between Skin and Bones

“Bones” are aspects of the property that cannot be changed such as the location, view, size of lot, noise in the area, school district, and floor plan.  “Skin” represents easily changed surface finishes like carpet, wallpaper, color, landscaping, window coverings.  Focus your selection on homes with good bones, because the skin can always be changed to match your tastes.  I recommend that you imagine each house as if it were vacant.  Consider each house on its underlying merits, not the seller's decorating skills.

4. Don't Be Pushed or Rushed Into a Decision

The first job of a Realtor and Lender is to supply you with information – as much information as you need or want.  Both professionals should have automated systems that inform you of all loans and properties that meet your requirements.  Don't make a decision on any home loan until you have seen all of your options.  Your real estate professional should give you complete, unrestricted access to all data in the Multiple Listing Service about (1) what similar homes are currently listed for, (2) what similar homes have been for sale but did not sell, and (3) what similar homes have sold for over the past six to 12 months.  Only when you have all the facts on loans and the housing market – unfiltered and unscreened by salespeople – can you make an informed decision. 

5. Stop Calling Ads

Real estate agents and mortgage lenders write ads to make the phone ring.  Many properties have drawbacks not mentioned in ads, neglect to tell you that you don’t qualify for those loans, nor do they fully disclose the up-front costs such as poor floor plans, traffic noise, power lines, or litigation in the community.  Many Lenders advertise low rates, but it’s very difficult to obtain those loans.  You’ll never find the best home or best home loan by calling ads. 

6.  Obtain Real-Time Information

If you're searching for property by calling real estate for-sale ads or driving around and calling on signs, you miss out on the best buys because (1) 17% of homes for sale don't have for-sale signs; (2) many brokers never hold open houses; (3) most “discount” real estate brokers never advertise their listings; and (4) the best property values often sell before they are advertised.  To obtain a total market overview, you want a real-time information system to provide you with instant notification on all properties meeting your requirements the day the information becomes available.

7.  Obtain Factual Data

As a Lender, I’ve met hundreds of buyers who were poorly represented by real estate salespeople who were only interested in selling a house and making a commission.  I believe that true real estate service begins first with furnishing you with factual information.  Any information that you want and need.  Whenever you want it.  Unfiltered and unscreened.  Without cost.  Without obligation.  That’s why I work only with a team of real estate professionals who provide a free, no-obligation HomeFinder Service.

There is never any obligation (or pressure) to buy.  The HomeFinder system provides you with real-time information – instant notification on every property meeting your requirements – the day the information becomes available, unfiltered and unscreened by a real estate salesperson. 

Here’s how it works.  The first step is to find the best home loan for your personal situation using my free HomeLoanFinder Service.  I’ll issue you with a written preapproval commitment – free and without obligation.  Next, simply tell the HomeFinder team what your dream home looks like – price range, square footage, location, style and whatever else you find important.  They program the system to download all the information on properties that meet your exact specifications, then set up the system to deliver the information to you by mail, e-mail or fax (your preference) as often as you want it – daily, twice a week, three times a week, or weekly. 

Our team uses state-of-the-art computers with direct access to MLS mainframe computers, so you can know about new listings the day they are entered into the MLS computers.  This is often five to 10 days before other buyers know about these homes – and one to three weeks before these homes are advertised or held open.  No matter what style of property you want, if it's out there, the computers will find it.  Do you want two or three baths?  A three-car garage?  A spa?  How about a fireplace?  A fenced-in yard?  An acre of land?  A wooded lot?  A quiet cul-de-sac street?  If you specify it, and it's out there, you can have that information the same day it appears on the computers – even before many real estate agents are aware of it. 

8.  Obtain the “Pulse” Of the Market First

Using the HomeFinder system, you quickly develop a true sense of the “pulse” of the market.  You see exactly what properties are available for sale and have a “30,000-foot view” of the market.  When a property comes available that is of interest to you, and you would like to see the inside, the team will make arrangements for you to tour the inside of any property, at your convenience, no matter which real estate company has the property listed.  There will be no pressure to buy.  Nobody will ever say to you, “This is a red-hot deal!  A creampuff!  You had better make an offer on this property today or you’ll miss out!”

As you can see, my team and I have a very different philosophy.  We are not salespeople.  We are consultants.  Our services are free.  We are paid by the seller if you buy a home, by the bank if you obtain a loan.  To get started finding the best loan and home for you, just give me a call at 408-629-2529. 

Clay Edwards’ Mission Statement

My mission is serving others by helping them realize their dreams of home ownership and other financial goals.  Most Lenders spend 70% of their time looking for business from the general public.  I devote my time to providing first-class service to my clients.  My success is measured by how successful my clients are as a result of our relationship.  I truly believe you can get anything you want out of life by helping others get what they want.  My mission is to build strong, lifelong relationships one person at a time…starting with you.

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 Tags: Home, Real Estate, Mortgage