The best deals out there today are foreclosed homes that are sold at the public trustees auctions held in the Public Trustee office every Wednesday morning at 10 a.m. (except holidays). I guess that is only one secret. Well, just be sure you have a cashier’s check for the exact amount of your winning bid by the end of business that day and congratulations on your new home . . . . . . Oh, you don’t have $195,000 cash lying around? In that case for the rest of us, here are the 9 Secrets:
Great Deal Tip #1: Have your Ducks In A Row
Get Pre-qualified. Work with an Agent. Be ready to hit the ground running. Starting your search before being pre-qualified or before talking to an agent will only cost you time and money. Setting up a team that is working for you from the start will better prepare you when the time comes to buy. If you know of some issues with your credit get those taken care of first. If your credit score is lower than it should be there are services out there that can help you increase your score. Find one that has a one-time fee and get it fixed, don’t pay one of the monthly service companies. Do these few things and you will be ready to hit the ground running and be ready to grab the good deals as the come up.
Great Deal Tip #2: Get Set Up On an Automated Home Search By Your Agent
Many websites post the newest listings a day or 2 after they hit the MLS. Once you have your financing in order, make sure your Agent sets you up on an automated notification system to let you know when new homes that fit your criteria hit the market. The Automated Home Search system we use actually lets our clients know about new listings before they hit most of the secondary market sites. Being first to the market can help you get the best deals as they arrive.
Great Deal Tip #3: November to January
Slower time of the year may mean more anxious sellers. If you want the most selection, March until September is the time to look for a home. There are usually twice as many homes on the market during the warmer months. If you want the best deal, November to January may hold the best chance for you. Only sellers who absolutely need to sell keep their homes on the market. There may be fewer homes on the market but since the number of buyers decreases during these months as well sellers may be more willing to drop their prices or look at lower offers.
Great Deal Tip #4: Don’t Be Afraid To Pull the Trigger
If you find the house you want, move on it:
- Make haste not waste
- Time is money
- Early bird gets the worm
- Pull the trigger already!
- And a hundred more colloquialisms tell us the same thing.
If you want to make something happen you need to take the initiative and take action! Many times today we see multiple offers on one house. If you plan on “sleeping on it” you might miss out. If you want to buy a home, whether for an investment or for your personal home, being ready to write a contract when the time comes can catapult you ahead of everyone else.
Great Deal Tip #5: Be Patient
Wait, didn’t you just say be quick? This is different. While not nearly as common as they used to be, distressed sales like foreclosures and shortsales can still be some great values. Shortsales can take for what seems like forever but if you can be patient you can often get a steal. The basic premise of a short sale is that the seller for whatever reason (divorce, job loss, adjustable rate mortgage, move, etc. . .) can no longer afford their payment or keep their home. In an attempt to avoid foreclosure they put the home on the market just below market value to try to get a quick contract and then negotiate with the bank to accept less than what is owed. These types of sales involve a third party (the bank) accepting the offer. The bank usually takes 45-90 days just to come back with an answer as to whether or not they will entertain the offer. After the bank and you as the buyer have come to terms with an agreeable price the 30-45 day contract to buy begins.
Great Deal Tip #6: Seller Paid Closing Costs
Keep more money in your pocket, ask the seller to cover your costs. Whether you are doing a 100% USDA loan or 20% down conventional loan you will need to pay for the privilege of borrowing the money. If you are financing a purchase of a $200,000 house you will probably be paying upwards of 2 to 3% in closing costs. Now closing costs are things like the origination fee to your lender, prepaid taxes and homeowners insurance, document fees, recording fees, HOA fees etc. . None of these charges go towards the principle on your loan. So ask for the seller to pay those costs for you. If you want to offer full price on a $200,000 home, consider offering $205,000 and ask them to cover $5,000 of your closing costs. Your payment will be slightly higher, but you will keep more cash in your pocket in the long run.
Great Deal Tip #7: Check Out New Home Standing Inventory
Quarterly figures could mean deals for you. Before I got into the resale side I worked for almost 2 years for a national builder. What I learned in my time working new home sales is that not everyone gets the same deal. People that pay full price are those that buy a home to be built from scratch or a dirt start. New Home Builders rarely negotiate off the price of these homes. They may offer some financing or design center incentives, but the best deals are on standing inventory. The closer to the end of a financial quarter and the longer the home has been sitting vacant the better your chance to get a deal. Standing inventory is unrealized profit until it sells. New Construction companies will often give away landscape, blinds, appliances, and thousands of dollars off original asking price just to get these homes off their books.
Great Deal Tip #8: Dig Deep
We are in a market of scarcity when it comes to inventory right now. People are making offers on homes that 4 years ago they would never make. Multiple bid situations are causing feeding frenzies that have seen prices get bid up 10-15% over asking price in some cases. This is where your agent can really come to your aid. The connections your agent has to others in the real estate community, the number of potential sellers they know can all help you get a head of the market. Last year I was involved in several transactions that were either deals done where the buyers found the house before it hit the market on their own, we combed the neighborhood knocking on doors, we scouted past withdrawn listings or I called agent friends of mine to see what they had coming up. The MLS and internet are the easiest ways to find you a home but if you need to find something ask your Agent to go the extra mile and Dig Deeper.
Great Deal Tip #9: Write A Letter. Make a Connection.
Part of an Agent’s job is to protect the Buyer’s identity and make the offer about the offer and not about the person. However sometimes your story might be just the thing that connects you with the seller that gets you that house. Here is an example: I listed my sister’s home last summer and we received 2 offers that were identical in every way. Both were the same price, both were FHA and both were offering to close within about 7 days of each other. The offer she accepted contained a letter that had this line in it, “My wife and I really enjoyed your home. We loved the hand painted rooms with Clifford and Company and we know that our future children will love them as well.” Our mother had painted those walls for my niece and nephew and the emotional toil of selling the home was instantly made easier for my sister by this letter. There was no question which offer she was going to take after she read that. Knowing that someone else would enjoy our mother’s artwork was more important than if the other buyer offered $10K more. So sometimes making a connection with the seller can be the difference. Now this may work more often in a competing bid situation to put you over the edge but if you are the only offer it may be enough to convince the seller to take your offer if it is less than what the seller wants (i.e. more what you want). Also please consult your Agent before attempting this delicate negotiating tactic. Who the seller is and what their situation is can determine whether the Letter is a good idea.
So to Review:
- Great Deal Tip #1: Have your Ducks In A Row
- Get Set Up On an Automated Home Search By Your Agent
- November to January
- Don’t Be Afraid To Pull the Trigger
- Be Patient
- Seller Paid Closing Costs
- Check Out New Home Standing Inventory
- Dig Deep
- Write A Letter. Make a Connection.
Follow these tips and you will be saving money in no time.
