In most areas of the country, the housing market is a buyer's market. This article will highlight some of the "Do's and Don'ts" for military families as they plan their home purchaser.
Step one in purchasing your new home is building your team, which consists of your lender/broker and Realtor. You should only consider professionals with a track record of excellent service through referrals, testimonials, and interviews. The mortgage lender's institution should be credible and stable. We strongly encourage selecting a lender who attends settlements. Don't use Internet lenders where no one person is accountable for your transaction. Your Realtor should be a dedicated buyers' agent familiar with the area, available during your house hunting timeframe, and experienced with military-family issues.
We discourage working directly with a listing agent or builders' representative -- they have "dual representatives" and divided loyalties. We encourage working with retired or former military members or spouses, or others who "get" the military culture and can address specific concerns and unique challenges.
which generally takes a few minutes, will determine an approximate maximum loan amount for which you qualify. This should be followed by a review of your overall financial status and monthly budget to determine the maximum monthly payment with which you are comfortable. Armed with these two numbers, choose the lesser of two and then mobilize your team.
The loan pre-approval process,
Selecting Your Home
Prioritize the key requirements for your new home. For most military families they are:
- Schools (An excellent web site to evaluate schools nationwide is given at the end of this article.)
- Commute
- Affordability
- Resale (value and ability to be sold)
Consider any special needs you may have and make your requirements known to your Realtor, who in most cases, can establish automated listings to be sent to your e-mail account. This simplifies the cyber shopping process.
During the Home Tours It's All About the Footprint
Good listing Realtors and smart sellers stage homes so that when you walk through the front door, your primary senses -- sight, sound, and smell, etc. -- are all heightened in a pleasant way. You may be greeted by classical music, perfect lighting, and smell the brownies baking in the oven. You won't see clutter or dishes in the sink. Homesellers get one chance to make a great first impression to appeal to all of your senses.
Good purchasers' Realtors, and astute buyers, ignore all that stuff. Furthermore, they look past the carpet, paint, music, decor, furniture, wallpaper, paneling, kitchen appliances and other items that can be changed. What do we mean by "footprint"? These are characteristics of the house that would require major, expensive renovations, or ones that simply can't be changed. Generally, these items are key issues for resale and value. For instance:
- Overall square footage
- Garage bays ( two is better than one)
- Bedrooms -- a three bedroom in an area where four bedrooms is the standard will likely be at a resale disadvantage when four bedrooms is the community standard.
- Closet size -- likely to remain the same even if the kitchen has spectacular granite counters.
- Bathrooms -- number and location.
- Floor plan -- for instance, some floor plans unfortunately have the dining area at a considerable distance from the kitchen (what were they thinking?)
- Basement exits -- basements without legal exits or windows reduce light. In many areas of the country, building codes now prohibit finishing a basement without a legal exit.
- The size and cut of the lot, and location of the house on the lot.
- Home style -- a contemporary style home where colonials are the norm may also be at a resale disadvantage.
- Fireplace -- in many cases, gas or electric fireplaces can be installed at a reasonable cost.
- Location issues -- unlikely the power company will move the transmission line that cuts through the back yard and the freeway that is 10 feet on the other side of the privacy fence will probably stay as well.
- Access to public water/sewer -- septic systems and wells can be expensive to maintain or replace. In many areas, you have no options, but this should be considered when public alternatives are available.
Fast Forward to the Negotiation Process
Smart buyers carefully consider the comparables before making an offer. Your Realtor should provide comparables of recently sold, similar properties. If sufficient comparables are available, and presented in a suitable spreadsheet format, the approximate market value will be evident. Likewise, buyers should also consider the "comparable active (not under contract) listings" as this will paint a picture of the competition the seller faces. Both can be presented to the listing agent to support the offer.
At this point, your Realtor's experience becomes critical to the process. They should recommend to you the lowest offer price that will still elicit a serious counter offer. Note I did not say "lowball" offer. Lowballs offers are dramatically below market value and the seller will not budge on the price if a counter offer is made. At this point, it's unnecessary to negotiate any further, and a second offer attempt places the buyer in a very bad negotiating position. Remember: The settlement and occupancy dates are a key part of the offer. A seller who has a need to either leave quickly or remain for an extra month may be more willing to negotiate a favorable price if offered that flexibility.
If a reasonable counteroffer is returned, there is an excellent chance of achieving a win / win for both the buyer and seller.
