In the current market there are some unusual things you may not know. There is plenty of inventory at a ten year price low and the current interest rate hoovers around five percent. Despite the current economic decline this creates a competitive buyers market. By competitive I am meaning strong buyers are a commodity. To increase your buyer strength in order to take advantage of the current low prices, interest rate and tax credit for those who qualify here are some points you may not have considered.
1. You may not need perfect credit. You will need a decent FICO score of around 650. You may have a few blemishes you will need to clear up. You are legally able to obtain an annual FREE copy of your credit report. You should do so and review them extensively and make corrections as needed with your creditors and the credit reporting agencies.
2. You will need to talk to a lender about the amount of money you will qualify to finance and what you will need for out of pocket expense for the down payment and closing costs. Your lender can inform you on which of the closing costs you are required to pay and which cost you can request the seller of the property to pay. You will need a ‘pre-qual’ letter (LSR) for your agent to utilize in determining which properties you will be able to secure financially and to submit to the seller with your offer when you find a suitable property. You may need a second LSR if the seller counters your offer at a higher price; which your lender will have discussed with you regarding your ‘bottom line’.
3. Your REALTOR ® can assist you in searching for properties in and slightly above your price range. Your REALTOR ® can assist you in determining how much to offer by doing a market analysis on properties in the same vicinity. Your REALTOR ® will assist you in the ‘negotiation’ process when and if the seller does counter your offer. After an agreement on price is made there will be an appraisal on the property for the lender and if the comparative analysis was correct the appraisal should be close to the agreed upon price.
4. The property seller pays the real estate commissions. That’s right; the buyer does not pay the REALTOR ® for their service. However, without a Buyer/Broker agreement all agents are representing the seller. If you’d prefer your agent represent you in the process an agreement to sign is available to you.
5. In the current market of ‘distressed’ homes (in need of repair, lacking utilities, no warranties, ‘as is’ and buyer to verify statements) there is actually competition for desireable properties. By desireable I mean clean enough to move into and priced right in the location you prefer. When you find one you must be ready to act. That includes having your financing arranged; your down payment available and a date you’re willing to specify to close. Even so there may be multiple offers or even a contract submitted/accepted before you take action. Your agent isn’t kidding when they say time is of the essence.
These are the five most important points you may not have considered prior to a selection.
There are other points to consider during the process which I will cover in subsequent blogs. Happy House Hunting!
Linda Landry, REALTOR ® Exit Realty 1st Choice