Purchasing a home comes with its own set of “unwritten rules”. Conventional wisdom and considered opinion have led homeowners to believe that you never make an offer on the first home tour, or you always close at the month’s end. The reality is the only rules you have to follow relate to mortgage fraud. But make no mistake. While there aren’t strict “rules” to follow, there are best practices that you should consider. Here are some suggested ones to follow:
1. Don’t make an offer without pre-approval: getting pre-approved means a lender has vetted your credit and financials and is so far willing to continue supplying you with your mortgage. Pre-approval letters detail your purchasing power and provide sellers and real estate agents a degree of confidence they won’t get anywhere else. In some instances, you may not want to start touring homes or making offers without a pre-approval letter in hand.
2. Use a real estate agent: for many homeowners, buying a home is the biggest purchase they’ll ever make. It’s something you’ll do maybe a handful of times. It can pay to have an expert assisting you throughout the home buying process. Real estate agents show homes, negotiate contracts, and close deals every month. They can help identify red flags and potential problems, all while working to best match up properties to your unique needs.
3. Put down earnest money: it’s customary, if not legally required, to provide a deposit when you make an offer on a home. Known as earnest money, this deposit is typically 1-2% of the purchase price, although the amount can vary by location and other factors. Consult with your real estate agent regarding the right amount. Earnest money follows in line with loan preapproval—it’s another way to show a seller you’re a serious, legitimate homebuyer.
4. Sell yourself: don’t just submit a solid offer and cross your fingers if you’re shopping in a competitive real estate market. Take every opportunity you get to tell your story and sell yourself. Include a handwritten letter with your offer. Ask your real estate agent to convey your admiration for the property and your hopes and dreams to the listing agent.
5. Tour homes in person: mobile video technologies like Google Glass are ushering in a new era for home tours. Cool tech and new apps can be huge for homeowners who are moving to a new city, province, or different country. These tools will continue to supplement the shopping experience. But nothing quite compares to the in-person experience.
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