Thursdays are devoted to the theme- the heart of this blog- real estate transactions and all things REALTOR®. BTW, a REALTOR® is a licensed individual who belongs to the National Association of REALTORS® and subscribes to a higher code of ethical behavior than the state licensing boards require.
Whether this is your first home purchase, or the last in a long string, you can be sure that this transaction is at least a little bit different from any other you have experienced. In fact, I have fellow agents who have been in the business for decades tell me that they are still surprised by the unexpected in purchases and sales. Sometimes the curve balls come from changes in law, but more often they come from changes in practice. People are always thinking up new (sometimes unethical) ways of doing things, and the area of real estate changing hands is no exception. I am thrilled to say that I work with a brokerage that provides deep expertise from generous fellow agents and brokers who are willing to share their discoveries and knowledge with me, so if something ‘smells funny’ in a transaction, I have plenty of people from whom I can get second, third, and fourth opinions.
If yours is one of the approximately 30% of central Texas transactions that is to be a cash purchase, you have a huge chunk of work behind you already. In paying cash, you do not circumvent the range of emotions that you will feel during the course of a purchase, but you will not also be playing the waiting game to see if you AND your chosen property will qualify for a loan. Whew!
For the other 2/3rds of you who will be acquiring a shiny new loan along with your dream home, the very first action you will take is to find a great lender. A great lender is a detail-oriented individual who stays up-to-date on all sorts of loan possibilities, including even local grants (!) that some borrowers are eligible for. A great lender works for a home loan institution that is motivated to get its background work done in a timely manner, and get you to the closing table on time with the least amount of drama. A great lender is a masterful communicator who will calmly talk you through all the details of what will be required of you, and who has an eye on the clock and on the calendar to keep the process flowing.
YOU, my friend, must pay attention to this great lender and pedal as fast as you can to come up with the information, documents, proof, identification, numbers, whatever, that the lender needs in order to get your business done for you. You will have your financial life examined like you can’t believe, but a lending institution, like a doctor, has seen so many bank account records/naked bodies that yours is no surprise. Now is not a good time for you to clam up and feel all embarrassed. A good REALTOR® has a few great lenders they have worked with, and can suggest that you meet with more than one of them to make your own decision. If you are thinking about using an online lender, please check with your real estate agent to see what her experience has been with other clients borrowing through the same online lender. They are not all created equal.
Now why would I be talking about a lender before you have even looked at properties? Isn’t the house the most important part?!?!? Here’s why: in current conditions and practice in our area, a smart seller would not entertain an offer from someone who doesn’t even officially know how much she can afford to pay, and would definitely not appreciate a REALTOR® taking you into his home and possibly wasting his time. You are not a ‘real’ buyer in anyone’s mind until you have been at least pre-approved for a loan, and better still, underwritten for an amount that equals or exceeds the price of the home you are making an offer on. In many areas around central Texas, there is still a high probability that you will be competing with other buyers when you make an offer on a home. You lose if you are not prepared to move quickly in offering and in executing a contract.
If you are in the 1/3rd group who will be paying cash, your financial institution needs a heads-up to prepare a statement to give to a seller that proves you can pay for the home you are making an offer on. Some sellers might be fine with making a phone call to your institution to hear it from the horse’s mouth, but other sellers might only consider you ‘real’ if you have it in writing.
Okay, now that you have been pre-approved, or underwritten, or you have your proof of funds letter, how are we going to work together to find you the home you have dreamed of? Let’s sit down together, if we haven’t already, and sign the paperwork that puts me to work for you. Did you know that, if I am showing you houses and helping you to buy one, I am legally working for the seller, unless we’ve signed a buyer’s representation agreement? Do you really want me working for the seller? No, I didn’t think so.
Most buyers have already spent untold hours looking at houses online and driving through neighborhoods. This is fine for starters, but let me share some secrets: those beautiful and alluring websites you are probably looking at aren’t up-to-date with the latest information. Very often, a house you love has already been sold. And, please don’t, that is, DO NOT believe the automated value that some algorithm somewhere has assigned to a property. Sellers, I am talking to you, too, here! Those values can be far, far off from the actual market for that particular property.
We will set you up on a search according to the criteria I elicit from you in directed conversation and written “homework”. We will suit your needs and wants as closely as we can match them in the market. I can change the search, if you decide you want to be in a different area, or if you realize you need something a little different from what you started out wanting. The story in your head about how you live your life comes into clearer focus through the buying process, and the plot might change a bit as we go along. Perfectly normal.
Back to looking at homes- have you ever read or heard about studies on choice and satisfaction? It seems as if the more homes we find to look at, the freer we feel to make the best choice, right? Apparently, uh-uh. Seems it doesn’t work that way. Too many choices just confuse and discourage us, even to the point where we procrastinate and don’t make a choice at all. Knowing this about the brain, we will look in the multiple listing service (updated every few minutes) at all the homes that fit your criteria: neighborhood, price, size, features, etc., and we will pick the 5 or 6 that you like best. I will make appointments to see them, one right after the other, if we can, and let you compare and contrast without brain overload.
You might decide on one that very day, and we’ll discuss the offer you want to make, and we’ll fill in the contract for you to sign and me to send over to the listing agent to present to the seller. On the other hand, after that first day of house-hunting, you might have a different perspective on what you want/need, and we’ll discuss this in a direct manner before we go on the prowl again. Occasionally, your will “lose” a house, or several houses, to other buyers who had offers more attractive to the sellers than yours was. There are ways other than more money to make an offer more attractive to some sellers, and if this is what you need to do to get your dream home, then that’s what we’ll do.
The last thing I’ll mention here is the emotional side of buying a home. Even the most facts-and-numbers-driven person has feelings that need to be recognized and handled in order to go from one stage of home-buying to the next. Real estate agents joke among themselves that one hat we wear is the therapist hat. Of course, for most of us, that isn’t literally true, but part of our job is to get you from the state we meet you in- a person without a new home- to the point at which you have closed on your home, moved in, and beyond, easing you through the myriad decisions and feelings that will come up. This is rewarding work!