There are a lot of decisions a buyer has to make during the searching and purchase process. The first ones are usually about location, how to pay for the purchase and what they want. Narrowing these down are vital to being able to find something to buy and to being able to act quickly and decisively when it is found.
Later there are decisions about what price to offer, whether to accept a counter-offer from a seller, whether to proceed or cancel when there are issues that come up on inspection report, which lender to go with when borrowing money, etc.
Buyers who are the most successful are the ones who are able to quickly make decisions, have confidence in their decisions, and act decisively. Those who struggle with these decisions or take too long making them – especially in a seller’s market like the one we are in – will spend a lot of time looking but won’t really get anywhere.
This is especially true in the current seller’s market with very tight inventory.
So what are the 2 things that you as a buyer can do that will help make the tough decisions easier for you including the one most often overlooked but most important.
The first of the main 2 factors that are vital in making correct decisions is information….all the information. This may sound like it is too obvious for me to even bring up but this is where mistakes can be made when making decisions to buy a certain property.
For example, a client was looking at homes and condos in the 400-550K range and was planning to get a 3% downpayment loan. He had been approved for a 5% downpayment loan but when he found something in the higher end of his price range that needed some work, he decided it would be better to go with 3% down and leave more of his money freed up for repairs and updates. I told him to contact his loan officer since they hadn’t discussed 3% down programs and he was told he could qualify for them but they are only available up to the conforming loan limit of approximately $425,000. This would mean he would have to come up with 3% of the $425K and then pay the balance of the purchase price in cash. So he then found out he would have to put 5% down plus pay for the repairs and updates needed which was vital for him to know in order to make a decision on what he was going to (and was willing to) offer for that house.
In that same circumstance, the listing agent had a report from a home inspection done last summer which showed that half of the roof needed replacing and that the foundation was crumbling in certain parts and needed further inspection. They didn’t provide that report until my client (and 3 other buyers) had submitted their offers and the seller sent back counter-offers. That report had information that was vital for my client to know in order to determine what he would do about the seller’s counter-offer.
When you are having difficulty making a decision, start asking questions until you find out all the information you need to be able to make that decision. Your agent can help with this by finding out what your concerns are or what items you have your attention on. The bottom line is that when you are unable to make a decision you need more information….or you haven’t fully defined the destination.
Defining the ‘Destination’
You’ve probably heard all sorts of people talk about ‘setting goals’ and their importance. To keep this very simple, one key reason to set goals is to know where you are going so that you can figure out how to get there and to be able to tell when you’re going in the wrong direction.
If you go on a vacation with no idea of where you are headed and just get in your car, you might just end up sitting in your car and not going anywhere. If you were in Los Angeles and needed to go to San Francisco but didn’t know that’s where you were going, how would you know which direction to travel on the major highways and how would you know which way to turn at an intersection.
That may sound kind of dumb but think about how that would apply to looking for a house when you haven’t clearly stated what you want. You see a house and aren’t sure about its location but then a week later talk with someone who says that it is in a great location – and then find out it went under contract yesterday. Then you go to a house and fall in love with it and want to buy it but after you go under contract realize that you really don’t want a house that has no air conditioning.
When you have no clear description of what you want, and what you don’t want, you have nothing to use as guidelines when looking at homes. If you have worked out what the home you buy must have in terms of location, size, number of bedrooms and bathrooms, yard/lot size, view, amenities, etc. – then it will be much easier for you to make a decision about the homes you go see. If you have a list of things a home must not have, then it will be easier to eliminate homes you see rather than keep wondering if they are right for you or not.
It may require more information to completely work out these 2 different lists. You may need to go drive through some areas that you hadn’t considered initially. You will probably want your Realtor to help with reports for specific areas or neighborhoods to find out how the market is doing there. You might also want to look into the schools for that area or community either to make sure your children will get the type of education you want for them or to see how they may affect future resale value.
It is also pretty common to add to or revise the items on the lists as you find out more about what is available in the price range you set and the areas you have chosen. In a restricted inventory seller’s market like the one we are currently in you may need to increase the areas you are considering or reduce the must haves and must have nots to be able to find something you like.
Believe it or not, this is a really key factor that is too often overlooked and especially in this kind of a market.
If you were looking for gold don’t you think it would be easier for the person with a map than for the one just looking in every cave and stream? It’s time to get your map worked out.
If you’d like a list of questions that can help in creating that map, please contact me.