FIRST THINGS FIRST
FIRST: Prove, with documentation, that you are financially sound
The FIRST THING YOU NEED TO DO is talk to a lender to verify that you qualify financially to buy one of the new homes you've found and want to see. It is always assumed, when you are out looking at homes, that when you find one you like and want to buy you can actually afford it, and are able to get financing. When you make your offer, the seller will expect it to be accompanied with documentation showing that your offer is financially worth considering. A seller won't even give you the time of day without it, and neither will any REALTOR® who is worth working with.
Does this sound a little over the top? After all, it IS a BUYER'S market and YOU are in the driver's seat, right? YES, THAT IS CERTAINLY TRUE, and nothing could be truer.... but ONLY after you prove to the world that you are good for the money - THEN you get to call the shots. Until then, you are just a NOBODY. This is especially the case in our present "stimulus desperately required" economy.
Now, if you are reading this before you have found a home you want to see, even better, because YOU are ahead of the game.
Getting a mortgage pre-approval is VERY easy today...
All you need to do is pick up the phone and call someone in the mortgage business. However - since you are going to use your pre-approval document to substantiate your financial position to a seller, the best pre-approval would be one that came from a lender who has a good reputation in today's economy. If you have been following the news, you you'll know that MANY do not. The one we recommend is Wells Fargo Home Mortgage. Marcia Francis 845-774-6961, or Colin Seitz 845-590-0680.
Remember that you are not making any commitment to obtain your mortgage from Wells Fargo - for that, they will need to prove to you that they are worth your business.
OK, now that you have documentation that supports your financial viability....
NEXT: It is time to choose a REALTOR® to work with
How much does a REALTOR® COST??
When you are buying a house that is listed in the MLS, the seller has determined the commission he will pay to the listing broker to market his house. He signs a listing contract stipulating the commission rate HE is paying. Therefore, the buyer does not pay the REALTOR® a commission, the seller does.
Some may argue that since the buyer is financing all of the purchase price, including the commission, that the buyer is actually "paying" the commission. NOT SO, and here's why: The bank is financing the purchase, and before they do this will have an appraisal done to substantiate the value of the property. Remember how YOU had to substantiate YOUR financial viability? Well, the bank has an independent appraiser do the same for the property to validate that the sale price supports the value of the house, and NO more. The bank is not a charity, and they are not going to "throw-in" the REALTORS® fee just to be a nice guy. NO, the REALTORS® fee is on the seller.
The bank finances the sale price, and hands it over to the buyer, who then pushes it across the table to the seller. The seller pays the brokers the commission, and keeps whatever is left - after the commission is taken out, and THATS WHY the buyer gets the services of a REALTOR® for FREE!
Actually the REALTOR® you choose is not always "free"
When you make a non-reasoned choice in who the REALTOR® is, the cost can be high. If you were to choose the first REALTOR® who comes along - the one who happened to be sitting in the office with nothing else to do that day, you just might be getting a goofball who is not experienced enough to advise you on something as important as say, the purchase price of the home...
Just today Shelly advised one of our buyers that the sellers agent on a house he wanted was the 'goofball' who didn't have a clue as to the value of her sellers property, and thinks it is worth $25,000 more than what it will appraise for - best case! Her advise? Don't negotiate, and walk away, because the sellers and their "advisor" are not being realistic on the value of the property.
Hopefully these sellers will think again as they see their first buyer go silent, but if not, oh well! At least our buyer won't be regretting throwing $25K down the drain on an over-priced house.
Moral of the story...choose a REALTOR® who has been around the block a few times.
Gray hair might be a good characteristic to look for.
Consider Interviewing Your Realtor
Even though the seller is paying the commission, giving you a "free ride," getting the full value our of your REALTOR® is certainly worth doing. Think of yourself as an employer who is hiring a representative to assist you in your purchase. Act like a human resources manager and interview one or more REALTORS®, and ask them;
- how they will be representing you,
- to describe some of their past experiences with buyers,
- to explain what their follow-up with you will be like,
- to commit to how much priority they will be giving you.
Ask questions, get comfortable, and make sure you choose a REALTOR® who knows how to value property, negotiate, work the suppliers, and take care of YOU.