How to get a great real estate deal
Published 10:26 pm Thursday, March 15, 2018
By Phillip Hines
While in Boy Scouts at Troop 3 in Smithfield, I remember the well-known saying we were encouraged to abide by: be prepared. Nearly two decades later, this motto still rings true — especially when it comes to finding a great real estate deal. If you are serious about a finding a great real estate deal (and everyone’s definition of “great” can differ), then you need to read below to be on the winning side of your next purchase offer.
This happens a lot: people see an amazing house for sale, call to go check it out, and it’s already under contract. Or worse, I’ve had instances where people are interested in a property but not pre-approved by a mortgage lender, and by the time they get their paperwork in line, it’s too late — someone else scooped up the house. You’ve got to be prepared, have a game plan, have your finances in order and be ready to act fast when a good deal comes along. Think Black Friday: everyone’s got their cash, tents and sleeping bags just itching to find good deals. The difference is that you never know when the next great real estate is around the corner, so if you’re serious, you’ve got to be prepared.
Part of being prepared involves your financing. A pre-approval is not enough. You need to have down payment funds in your bank account. You need to have anywhere from $1,500 to $2,000 in your checking account for your earnest money deposit, home inspection and appraisal. Depending on the property, there could be other inspections that are necessary too, thus increasing your out-of-pocket costs. In addition to your down payment, you may need closing costs funds, which is generally 3 percent of the sales price. You can see how this can quickly add up to tens of thousands of dollars. I once bought a house for $89,000 and had nearly $18,000 in cash out-of-pocket costs. You and your real estate agent need to have a serious conversation about your strategy or else you’ll find yourself going under contract on a house, and then having to back out due to lack of cash in your checking account. Or worse, you may be in so deep that you liquidate your retirement accounts, incurring early withdrawal penalties and loss of potential future earnings.
If you’re prepared, then the rest is up to you. You need to be ready to act and trust your preparation. Be confident. If you have people in your life that aren’t following the process and helping you, then I encourage you not to ask them for their approval right before you’re about put in an offer. We all know how easy it is to judge and critique others from the outside looking in. Most of the time, your family and friends will have good intentions, but there comes a point when there are too many “chefs in the kitchen.” It’s your journey and your house. Everyone has a different approach when buying, and so the opinions you’ll likely receive won’t be right or wrong, per se. Real estate is not cut and dry. Some argue that 30-year mortgages are better than 15-year mortgages and vice versa. The bottom line: do your homework, have realistic conversations with your agent and be ready to jump on the opportunity when a good deal presents itself.
Phillip J. Hines is a local real estate agent originally from Smithfield. Visit his website at www.PhillipJHines.com.