2017 is likely to remain a seller’s market – inventory is low as are the number of days on the market and prices have increased – see my analysis for December. Here are some tips to help ensure a smooth, unbumpy closing:
1. Get Pre-approved
Get pre-approved for a mortgage with a reputable lender. If you don’t know one, ask your agent for a recommendation. By law (RESPA) agents are not allowed to receive referral fees, so your agent will recommend the one they think has the best chance of getting you through closing. By getting pre-approved, sellers will know you are serious and you will know what kind of budget you have to work with. This list will help you determine what documents your loan office will expect to see from you.
2. Understand How to Read the Market
Yes, this is why you hired a realtor – that’s their job. However, if you can keep an eye on the market, you’ll know how quickly you’ll need to move on a particular property in a particular location. There’s one town house development in my home town of Purcellville where nothing ever lasts on the market for more than a week unless it is really overpriced. Leesburg is also really hot for town houses right now – if you don’t make an offer immediately after an open house, you probably won’t be buying that house. It’s a seller’s market and real estate agents know that, so make your offers quickly but realistically. Some agents recommend that you tour 10 houses before making an offer – if you do, make notes or the houses may blur together!
3. Make a List of Your “Must Haves”
Don’t visit any home with less that 75% of your requirements. In the case of location, don’t visit anything that is outside of your target area. You can change most things about a house but you can’t change where it is.
4. Steer Clear of the Most Expensive House on the Block
Expensive properties tend to by undervalued according to the properties around them. The best strategy is to go for one of the least expensive homes in a neighborhood it’s value will tend to rise more as the homes around it increase – remember we are in a market where home prices are increasing at a pretty rapid clip!
5. Avoid Big Capital Purchases or New Credit Lines Before Closing
I once opened a bank account a couple of days before closing which totally alarmed the underwriter and I had to provide documents to show that the credit check the bank ran wasn’t because I had just purchased a Lamborghini. Don’t do anything that might trigger a credit check or change your debt to income ratio. Also avoid changing jobs or becoming self-employed!
6. Avoid a Border Dispute
Absolutely budget to have a survey done, especially on a home with a year – firstly this will save you from potential disputes with neighbors and secondly because your property taxes is likely based on your property size.
7. Make an Oddball Bid!
Strange but true, sellers tend to respect a bid that is an oddball number and are likely to take it more seriously. A round number sounds like every other bid, but an oddball number may make them think you thought it through very carefully!
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