Today, we're lucky enough to have a guest post from Tali Wee of Zillow. Please give Tali a big Live Like a Mensch welcome!
The process of buying a home can be exhausting, especially for first-time home buyers. It's mind-boggling to compare the square footage, acreage, school district, commute to work, number of bedrooms, days on the market, condition and price of each home. Buyers often spend hours researching new listings online and coordinating with their real estate agents or spouses to schedule times to view the homes. Many home buyers rely on their impressions of the home at an open house to drive their buying decisions. In competitive housing markets, decisions need to be made quickly, leaving little time for buyers to vacillate about home features. Here are a handful of helpful tips that buyers should follow to get the most out of their home-shopping experiences, particularly at open houses.
1. Arrive Prepared
Home shoppers can certainly visit open houses before they're ready to buy, just to get a feel for the market value of homes. However, once shoppers are ready to purchase a home, they should make a priority list of their must-have home features and keep it in mind when they visit open houses. It's easy to get distracted in-person by an incredible bathroom, modern kitchen remodel or an amazing backyard. Buyers who begin with a list of items they desperately want or even a list of items they absolutely do not want are more likely to stay on track, and end up buying a home they truly love.
If buyers have children attending public schools, they should research the best schools in the area. Before visiting an open house, check which school district the home falls in and if it's competitive enough for the kids. Knowing as much as possible about the properties helps buyers make educated decisions on home value. For instance, a home in a low-performing school district is worth less than the exact same home just two blocks away in a high-performing district. Another tip for home-shoppers who plan to visit open houses all day is to map out the listing addresses beforehand. Buyers often waste time traveling all around town and back, when they could be viewing the homes on a logical and direct route.
2. Establish Financial Limits
The housing market is recovering and getting increasingly more competitive, requiring buyers to be prepared to make reasonable offers shortly after visiting the desired homes. Before house hunting, serious buyers select a lender to discuss the cost of mortgages, interest rates, size of their down payment and the steps toward preapproval. Preapproved buyers know the absolute maximum loan amounts their lenders will fund. These approved loan amounts help buyers focus their house-hunt in a realistically affordable direction.
For example, if they're approved for a $200,000 loan and theyíve saved a $30,000 down payment, then the buyers should look for homes priced at approximately $230,000. Buyers do not need to purchase a home for their full approved loan amount. There is always room for negotiation, but a home priced higher than $250,000 would likely be a waste of the buyers' time.
Preapproved buyers are generally taken more seriously by sellers than buyers who have yet to work with lenders. Plus, their offers usually move quickly through lending institutions because their financial documents have already been collected and reviewed.
3. Use Available Resources
When buyers attend open houses they should communicate with the agents showing the homes. These agents normally have a wealth of information on the local housing market. They can answer questions about the home, its surrounding areas and the level of interest other buyers have expressed in the property. Agents usually have in-depth marketing materials with property and neighborhood details. If buyers are looking in a specific community, agents and their marketing pamphlets may be incredibly informative about the area.
The agent on site is commonly the seller's agent, but sometimes it's their stand-in. These agents may be available to represent buyers as well. If buyers find the onsite agents particularly knowledgeable or helpful, it's a great opportunity to assess their experience and get connected with an agent who really understands the community.
4. Take Cues from Other Buyers
At open houses, prospective buyers act as natural indicators of how accurately the properties are priced. Buyers who are new to the market can take cues from the more experience buyers. If they walk in, through the main areas and right out the door, it's likely the property is overpriced. Buyers who are willing to pay for the property as-is spend time discussing the home with the on-site agent. They'll generally ask questions about the condition of the home, its surrounding areas and how much interest the agent has seen. Buyers who are fairly new to the market should listen carefully to the questions the other buyers ask and the answers the agent gives.
Serious buyers make offers right away, and it's helpful for them to gauge the level of interest of other buyers to competitively adjust their offer price. If the seller's agent has many interested parties, the buyer might make an offer for more than the asking price of the home. Such attempts position buyers to have their offers accepted.
Additionally, one buyer may recognize a flaw in the home and inadvertently alert fellow buyers at the open house. Be aware of the complaints of other shoppers. Perhaps the flaws aren't as important to some buyers but could become points of negotiation during the sale. Shoppers who are particularly interested in a listing might bring an inspector or friend in the industry to the open house. If the inspector doesn't find any major flaws in the home, then the buyer may make an offer waiving an inspection. In highly competitive markets, this is one tactic to push an offer to the front of the seller's stack. However, fellow buyers can benefit from keeping close tabs on those inspectors and their conversations.
In the end, hopefully all prospective home buyers are able to purchase houses they adore. Though the process of shopping for and landing the perfect home can be overwhelming, experienced buyers take advantage of the available shortcuts. With proper preparations and research upfront, attentiveness at open houses, successful negotiations and precise financing, prospective buyers become winning homeowners.
Image courtesy of Ildar Sagdejev