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In today’s hectic sellers market, being a buyer can feel overwhelming. We feel it is our duty to ensure that our clients are as informed and educated as possible on how to put their best foot forward when they are looking to purchase a home. We think these five tips may just give you the best possible chance of securing the home of your dreams:
Budget: The notion of budgeting applies to both money and time. A smart buyer will know exactly what they can afford, and what they cannot, as far as price goes, but they will also be prepared with a timeline for the transaction as well. As a buyer, you might want to think about some of the following things when mapping out your time budget as well as your financial budget: How much can you afford to spend on a home? Are you planning to pay for your new home with cash or are you planning to get a mortgage. If you are getting a mortgage, how much are you planning to put down as a down payment? Are you looking to purchase a new home or a resale or are you planning purchase a lot or land to build a home? If you are planning to purchase a resale, do you need to move into the home right away or would you be willing to let the sellers stay in the home for a period of time after closing if they requested to do so? Are you an investor looking to do a 1031 exchange? If so, are you aware of the time frames around how quickly you must identify a new property and complete the sale? Are you planning to renovate the home? If so, what does your timeline and budget look like for that? Will you move in before renovation or after? Are you looking into neighborhoods with HOA fees or membership fees of some sort? If so, how would those affect your budget? There are so many things that factor into planning a budget for your new home. We suggest you map out the answers to as many of these questions as possible prior to engaging in an in-person home search. A professional real estate agent (mentioned below, of course) can help walk you through various scenarios and nail down a game plan for your home search.
Be ready: Once you know your budget and whether or not you will be paying cash or getting a loan, be sure to obtain a pre-authorization form from your lender or proof of funds from your bank before touring homes in person. This way, if you find a home you love, you can make an offer right away. In order to submit an offer on a property, most sellers will require that you also submit a pre-authorization form and/or proof of funds with the offer. These are vital pieces of information to have on hand. Also, do your best to determine your list of “must haves” like location, size and amenities. These will be helpful in identifying which properties would be best to tour in person.
Get the Inside Scoop by Partnering with a Real Estate Guru: We suggest selecting a professional agent who is actively working in the market where you are looking to purchase (like the agents on our team here at azarchitecture/Jarson & Jarson Real Estate). Per the Arizona Department of Real Estate, as of January 1, 2022, there were 61,605 ACTIVE sales agents and brokers in the State of Arizona. This means that you probably know someone who has their real estate license. Be careful though. Unfortunately, just having an active real estate license does not mean that the agent knows how to navigate this market. We suggest looking for an agent who not only knows the area where you want to buy, but will also work with the sellers or listing agents to determine what is most important to the sellers in an offer. Having an agent with a great track record of getting to the closing table as well as stellar negotiating skills will greatly benefit you in succeeding in this difficult market. They may even be able to point you in the direction of Coming Soon listings or pocket listings that haven’t been syndicated to the public yet.
Don’t Forget the Terms: Sometimes, the best offers include more than just a high price for the sellers. While it is true that offering the highest dollar amount might often win the day, sometimes additional terms that favor the seller can make a lower offer look competitive with or even better than the higher offer. This is why it is vital to find out what is most important to the seller. The best way to do this is to have your agent reach out to the listing agent or seller if you are purchasing directly from the owner. Occasionally, sellers may desire things like a quick or even extended close of escrow, other times they may desire to stay in the home for a period of time after the sale closes (known as post-possession). And, while it can be hard to compete with a cash offer that doesn’t require an appraisal, it is possible to submit a financed offer that is competitive with the cash offer by either waiving the appraisal or agreeing to an appraisal shortfall. Your agent and lender can help guide you through some of these possible terms, as well as others, if they are of interest to you.
Give Yourself a Bit of Wiggle Room: While we typically recommend putting your best foot forward in this market, that doesn’t necessarily mean that you have to show all of your cards at once. Prior to making your offer, determine any wiggle room you have in the offer price by referring back to your budget. Next, determine any wiggle room you have in terms by establishing things like how quickly your lender can fund your mortgage and whether or not your lender might be able to get an appraisal waiver for you. One semi-scary idea that seems to be floating around in this market is the idea of waiving the inspection period. While we don’t ever recommend waiving the inspection period, you could opt to offer to purchase the home “as-is” meaning that you agree not to ask the seller for any repairs or credits in lieu of repairs. Be sure you are acutely aware of the difference between purchasing a home as-is and waiving inspection. These are two totally different things. Once you have established your “wiggle room”, make the best offer you can that is most comfortable for you. Depending on the information you receive from your agent about what the seller needs, you may choose to offer your “highest and best” right out of the gate. If not, you will have at least established how much you are willing to negotiate if the sellers counter or ask you to resubmit your actual highest and best offer.
We hope these tips will help you achieve your real estate goals in 2022! Feel free to reach out to us with any questions or comments you might have. We are here to help you!