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How to be an Attractive Home Buyer!

March 22, 2013
This is the time of year that tends to flood the housing market with buyers, and in markets with low inventory, the competition is very stiff. As home prices continue to recover and interest rates remain at near-record lows, most houses are receiving multiple offers. In order to win the bid, buyers need to stand out from everyone else. According to the National Association of Realtors, houses sold in 71 days in January, down from 99 days a year ago.Since markets are moving fast, experts recommend buyers have their loan pre-approved and the down payment ready before starting their search.  “The market is changing,” says Realtor Wendy Blackmon with Beachfront Realty in Aventura, Fl.  “The inventory is low and the demand is high. A buyer needs to know exactly what their parameters are in today’s market.”

“Multiple bids are becoming the norm, so be ready to compete and do your homework to seal the deal. The longer the negotiations, the more chance you could lose out to someone else who made a better offer,” says Blackmon. “Be reasonable without being difficult because until an offer is signed, sealed and delivered, other buyers can bid on the property.”

While you have to compete in the current market, you must maintain your budget. You don’t want to end up paying more for the house than it’s worth.

Here are a few tips that experts recommend in becoming an attractive buyer:

1.) Plan Ahead

Check your credit for accuracy and avoiding making any big purchases or taking on any big debt during this time.

Debt brings down your credit score and increases your debt-to-income ratio which are two critical things banks look at when qualifying and preapproving you for a loan. Your debt-to-income makes up 30% of your fico score.

If your debt-to-income ratio is too high, I recommend paying down as much debt as you can to lower this ratio.

2.) Set Your Price

If you all you can afford is $300,000.00 than stick to $300,000.00. You don’t want to be house broke.

If you do spot a great deal on a house, don’t wait days to make an offer.  Time isn’t on your side.  Learn how to spot a great deal by researching an area’s home prices.

Do a little due diligence and go to open houses—do your homework. Being educated will help you negotiate and could prevent you from paying more for a house than it’s actually worth.

3.) Cash is King

The more cash you have, the more appealing you are as a buyer. Putting 20% or more down makes you look more financially stable and gives sellers comfort that you’ll qualify for a mortgage.

Cash can cover a multitude of problems when you make an offer, whether it’s difficulty with the mortgage process or a lower-than-expected appraisal. A buyer can contribute more cash to cover the difference between the appraisal and offer price.

4.) Get Preapproved before Your Search

Getting prequalified for a mortgage gives a ballpark for what you can afford to buy and will streamline your search process.

If you’re financing your house, have a pre-approval letter with you and if you’re paying cash, have proof of funds that shows you’re good for it.

When you know what you can afford and are preapproved, you won’t be shopping outside of your price range.

5.) Limit Your Contingencies

Experts suggest having as few contingencies as possible to be an alluring buyer. Don’t overcomplicate your offer to the seller.

Experts advise making an offer based on a satisfactory home inspection. It will give you the opportunity to walk away if you find in an inspection that there are too many problems with the house.

Making your offer contingent on you selling your house first will make you a less appealing buyer. If you need to sell your house before buying a new one, then sell your home first.

6.) Be Flexible with Closing Dates

Let the seller know that you would be flexible on the closing timeline.

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