People have lived before us, and we often are fortunate to learn from their triumphs and short comings. And in real estate, we live this daily. One common move to avoid is this: beginning your home search with looking at homes. It seems logical to want to start looking for a home, with the homes. However, this can be damaging to your expectations. I promise that anyone in the state of NY looking to buy a house will not regret getting pre approved, as your first step. Pre-Approval is much stronger than a pre qualification. With the approval, you have actually applied to the bank demonstrating that you are qualified to buy a home, and it has been proven with documentation like pay stubs and credit reports. “Pre Qualified” is often more of a conversation and based on information the buyer provides to the lender.
The Mistake:
Let’s take a look at this mistake an how to avoid it, we’ll call our client “Buyer Bob.” Buyer Bob decides he wants to buy a house, so he calls the phone number on the sign in the yard of a house he thinks he’s interested in. The agent answers the phone, and will mostly likely want to show Buyer Bob the home, for two reasons. First of all this agent was hired by the seller and is required to do what is in her seller client’s best interest, they have a written agreement. And showing Buyer Bob the house will please her seller. The second reason: if Buyer Bob doesn’t like this home, maybe she can turn him into her own buyer and sell him something else.
Perhaps, Buyer Bob decides he wants to buy the house. This is a happy day for this agent, she has a buyer and a seller and one house to sell– it doesn’t get much better than that. The agent can help Buyer Bob write the offer, hold his earnest money and negotiate a deal. If the offer is accepted, and Buyer Bob proceeds with the home inspection, at his own cost of course, the next step would be for Buyer Bob to apply for the mortgage, it’s time to show us the money.
When he discovers that he doesn’t qualify– this is devastating to him, the agent and the poor seller. In our region, when a deal falls apart due to a buyer’s financial inability, the seller can: ask for a copy of the home inspection, keep all or a portion of the earnest money, plus, some banks also take a payment at the time of application. In the end, Buyer Bob can loose over a thousand dollars and will not get the house he wanted.
How to avoid this:
Take a day or two to get PRE APPROVED before you start your home search. And shame on an agent that is too timid or for another reason, doesn’t ask if a buyer is mortgage-ready or has cash in hand.
Avoid these mistakes and you’ll be sure to have a smooth purchase process. For more tips visit my YouTube Channel.
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