Three Zigzags All Buyers Will Face When Buying a Home

Note: This is the last of the posts I will be making in my series the ABCs of Buying, Selling and Investing in Real Estate.  In each of these posts, I will select a letter (z for this post) and write up a fictional story centered around the letter.  The story is fake, but the advice is real(ty). 

This post continues the story found in Three Zesty Ways to Get Home Sellers to Take Your Offer

Zach called me one busy Monday afternoon as I was working on finishing up my lead generation for the day.   Zach had come to me last Fall about how best to approach making offers.  He had not gotten far with his 15 offers he had made and was asking me about things that would make his offer stand apart from the crowd.  Zach told me on the phone that he had finally decided to jump back into the house hunt and was going to use me as his realtor when buying a house.  After saying my thanks to him, I asked him if he changed his mind on his approach to finding a home.   He said he had done a lot of reading since we had last talked and felt more comfortable with the process.  He said that was until he spoke with his mother about starting it up again.  Zach’s mom took the opportunity to tell Zach all the worst horror stories about house hunting she had heard over her lifetime.  By the time they finished up, Zach felt confused again.  He said before they start any house hunting that he wanted to speak to me about the decisions he will be having to make while searching for a house.   He understood that he would have to do a lot of zigzagging in his mind once a decision was presented to him.  He said he liked to go over all the possible outcomes of his decisions, which made him do a lot of right and left turns in his mind as he thought things over.   He wanted to know the biggest decisions he would have to make.  

This is what I told Zach…

First, I thanked him again for selecting me as his agent.  I was pleased that he thought of me first after not speaking to him for a year.  I then asked him if his parents were to be assisting him with his house hunt.   I inquired about this because I had learned over the years that parents helping their adult children find homes brought a different set of challenges to the house hunt.   Parents, rightfully so, wanted their child to have a good home and not get cheated by a scam artist.  I had found that I had to prove myself all over again when the parents showed up to see houses with their children.   I was asked over and over questions I had already answered for my client.   I did so with patience and politeness.  I had never lost a client over a parents expressing concern about me.  Parents, however, will often have a whole different agenda than my clients when it comes to finding a home so I always have to mix what my client’s wants with what I am hearing his parents telling me.  I told Zach.  “If your parents are planning on helping with the home search, I want you to know that I will come to you with all final decisions as you are my client and not your parents.  I will listen to them, but ultimately it is your decision.”   Zach thanked me for the forethought, but he  said his parents lived on the East Coast and couldn’t afford to come to Texas to help him search for a home.   He asked me again about what decisions he would be needing to make so he could start reflecingt on them before we started our search.  I told him there would be many different decisions for him over the course of buying a home, but here were three I felt provided the most zigzags for him when buying a hosue.

  1. Do you call more than one mortgage professional? – When it comes to buying a house, the first real decision Zach needed to make was what mortgage professional did he intend to use to purchase the home.  Zach said he had a friend in the business and just planned on using him.   I warned against this.  I told Zach.  “You may be tempted to take the easy route when looking for a mortgage professional, or lender, but I recommend you call at a least three to get details on the many flavors of mortgages each lender will offer.   You have to decided if you want a fixed rate mortgage or a Adjustable Rate Mortgage.   Lenders will give you different incentives to work with them, some even giving grants to first time home buyers to help with their down payment and closing costs. ”  Zach acknowledged that he understood.  I went on to tell Zach that there is a good chance he might get different interest rates as well from different lenders so it is always a good idea to shop around. You will have many different decisions to make before you finally pick a mortgage professional.  No matter how many times you zig and zag in your decision making process, be sure to always pick a lender that fits your own personality as well.   There is nothing worse than working with a person that you don’t get along with personally.
  2. Do you change the home search criteria? – Based on Zach’s previoius house hunt, I told him that he needed to review the specs for his perfect first home when buying a house.  Zach had some difficulty getting an offer accepted so I wanted to him to look closely at the criteria he was using to evaluate his home.  He needed to be realistic with his budget and not try to find a deal in this tight seller’s market.   Zach had to know that most homes under $200,0000 would have stiff competition while homes above that price point move more slowly.   Was Zach being too picky with the house characteristics?  If he wanted a four bedroom home that only existed at prices above his budget, he needed to come back down to earth about his expectations.   Location was another great consideration.  If he couldn’t find what he wanted in his target location, would he consider a home in close proximity to where he wanted to live.   He would most likely zigzag a lot as he thought over these decisions and most likely it would even bleed out into the actual house hunt itself as I have seen many a buyer go back tot he drawing board after looking at a few homes.
  3. Do you go crazy on your offer? – When buying a house, you can often be tempted to put into an offer that is too outlandish just to get the home.  However, when this does occur, you will regret it six months, or sooner, after you move into the home and it ends up not being as perfect as you had dreamed.  During this tight seller’s market, I have seen some buyers put in offers $15K above asking and even told that it wasn’t enough by the listing agent.   Buyers can offer to pay for many of the costs that traditional fall to the sellers like title policy and survey, which will cost the buyer a couple more thousand dollars.   Do you give more in earnest funds and option funds?  I have seen one buyer put in earnest funds of $20K just to have his offer accepted by the seller.   Option periods come in at three days or less, when they traditionally are seven days to ten days.  The point I was attempting to make with Zach is that you don’t have to go crazy with your offers when buying a house.  In the end, you need to be reasonable after you zigzag your way through all the different aspects of an offer.

 

Zach took a huge breath when I was done.  He said he had been thinking about calling more than his friend about the mortgage. He wanted to find a lender who would give him quick closings, which he felt would be more attractive to sellers.   When it came to his home specs, he admitted to me that he wanted to keep them the same, but would think about them to see if he wanted to make any changes.  Finally, he agreed to reflect on what he wanted to put in offers, but didn’t want to make them too outlandish. He asked me to keep him honest with his offers.  I told him I would.  We made plans to get together in a week to start planning after Zach had time to zigzag through all his decisions.