7 Things I Wish Every Buyer Knew Before Making an Offer

If you haven't heard on the news, from a neighbor, or more commonly nowadays on a Zoom call, most buyers have difficulty getting their offers accepted. Many buyers are looking, but what I have been finding out is that the accepted offers are from educated buyers that understand the home buying process. That leads us to step #1.

#1 Find out how much you can afford

To find out what house you can afford is the first step every buyer needs to do. In order to do this, you will need to talk to a lender. Speaking with a mortgage lender does not cost any money, and you will find that most will want to help you succeed. Just like a real estate agent, a mortgage lender only gets paid once you complete a real estate purchase. A mortgage lender can guide you in finding out your budget by asking questions about your income, credit history, and how much down payment you have for a home. With general information, the lender can give you pre-qualification. It will give a general sense of what you can afford,

Before you go house hunting, it is vital to take the next step and have the lender run your information, find out your credit situation from all three bureaus, get monthly statements of what you make and what you spend. Once the lender has enough information, they can run it through their banks and get you a mortgage preapproval letter. The preapproval will give you a more accurate idea of what you can afford. The lender will be able to give you an idea of monthly mortgage payments, interest rates, loan programs you may qualify for if you qualify as a first-time buyer, fees, estimated property taxes, if conventional or FHA is better for your situation, and more. The preapproval can be used by the real estate agent when sending an offer to show that the client can afford the home.

#2 Team up with a real estate agent immediately

I would love to earn your business; regardless of which agent you use, here is what to look for in a real estate agent — an agent who asks you what you want, at the time you want it, and the terms you are comfortable with in buying a home.

Let me break it down — an agent wants to know your motivations and desires to move in order to help you look for your next home. Because the needs and wants to differ for every buyer, the more in-depth information the buyer provides the agent, the better the agent can understand what is essential to the buyer; thus, the agent can find the home.

—Examples: what size home, lot size, how many bedrooms, bathrooms, what should your next home have, what can you do without, etc., location — what neighborhood, do you like cul-de-sac or off the main street.

The agent would like to know when the buyer is ready and willing to move in. Once an offer is accepted, the transaction takes approximately seventeen to forty-five days to close. Knowing that it may take some time to complete, finding out what timeline the buyers are comfortable with will help when speaking with the sellers and making sure the values of each party align.

An agent can adjust the terms in the real estate purchase contract. Understanding what the buyer is willing to change (from how long they need for inspection to who is going to pay for city transfer taxes) can make your offer more appealing to the seller. Having the client, real estate agent, and mortgage lender working together early in the process will make it easier to navigate what steps to take.

#3 Look for properties lower than the maximum amount you are willing to pay.

Most neighborhoods in California are going over the listed price. An agent familiar with the neighborhood should have a better idea of the price range in a neighborhood-based on historical data and how much higher over-list homes sell to figure out the purchase price. Using historical data and looking at the comparative homes currently on the market, the agent can explain how much to expect a home to sell.

I have witnessed time and again buyers who look at homes they can barely afford and have no power to compete in a bidding scenario. This leads buyers that are "on the hunt" for their next home to take well over a year and continually get bid out because they do not understand this concept. For example, in parts of South Pasadena, I would recommend buyers to expect a home to sell for 20% over list price, while Pacoima can be 0-5% over list price. It also varies in the city, block by block. I recommend having your agent run a competitive market analysis for any property you are willing to see or write an offer.

#4 Get your agent to create your home search campaign

Nowadays, home inventory is going fast. It is typical for a home to sell over one weekend. Using tools that can search where agents list their homes (MLS), like CRMLS Connect App or KW App, can instantly notify buyers as soon as a home hits the market. A good agent should be a pro at using their search tools and not expect the buyer to master them. For example, for most searches, I strongly suggest adding "Coming Soon" listings to the search campaigns. It is even possible to make offers on Coming Soon listings before they hit the market.

#5 Be flexible in your home selection

Let's face it, there is no perfect home on the market. As a homeowner, you can make the home perfect based on what you like once you move in. Maybe you have only been looking at three-bedroom homes when there may be a two-bedroom with a bonus room or a converted basement that will work for you—possibly a smaller house on a lot where you can expand on the land. Making a garage into an ADU will add the additional square footage you desire. Or instead of two bathrooms, one full and a half bathroom will do the trick. If you are looking at the more common selections of homes, other buyers are more than likely to look Learn to be adaptable and savvy in your searches.

#6 Get your agent to learn the seller's motivation

If you find that home you'll like to make an offer on, it's a good idea that your agent contacts the seller's agent. Your agent can find out vital information from the seller's agent. For example, if the seller wants a longer time to close the transaction, needs to sell their home first, or something else they didn't disclose on the listing. I find that a seller's agent is more willing to work with a buyer's agent he has had a conversation with. A communication line among agents will give the buyer's agent ammunition on what to write in the contract.

#7 Understand the contract

The contract is where most agents and buyers can improve in getting their offer accepted. If you read tips 1-6, you should have a wealth of information on how to tailor your offer to make sure it is the one that gets accepted, at least countered. If you follow every step, you should have a sound loan(preapproval/ upfront underwriting), financial room and time to compete, and a better understanding of what the seller is looking for in selling their home, saving you time and money.