Tips for Home Shopping During the Holiday Season
This is the best time of the year to be a home buyer.
Why is that, you ask? Consider these two facts:
- Only seriously motivated sellers have their houses and condominiums listed for sale during this slowest season of the year for sales.
- Competition from other prospective home mortgage applicants/buyers is at its lowest; so your purchase offer will be even more welcome than usual.
There is an additional reason 2006 year-end is an especially good time to be a home buyer: It’s a buyer’s market in most cities, meaning there are more homes listed for sale today than there are qualified buyers in the market so sellers (along with their listing agents) are extremely anxious.
Think about the following tips as you weigh your options:
BEFORE SHOPPING FOR A HOME, SHOP FOR A MORTGAGE. Before rushing out to buy a house or condo, savvy buyers first get approved in writing for a mortgage. This is a slow time of year for mortgage lenders so they welcome your loan application.
Although home mortgage brokers can arrange mortgage pre-approvals, the letter or certificate must come from an actual lender, such as a bank or mortgage banker. Most are valid for 60 to 90 days.
Don’t even consider a mortgage “pre-qualification,” which means only, “We looked at your loan application and you appear to qualify but we haven’t actually verified your credit and income.”
However, home buyers should understand a lender’s mortgage pre-approval is subject to (a) the lender’s appraisal of the home you decide to buy, and (b) reverification of your credit and income (don’t apply for additional credit or go out and buy a new car before you complete your home purchase).
WORK WITH AN EXPERIENCED BUYER’S AGENT. After obtaining a written mortgage pre-approval from a lender, the next step to buying a home during this time of the year is to work with an experienced buyer’s agent who understands the market in the vicinity where you want to buy.
Ask friends, relatives and business associates for recommendations of buyer’s agents.
There’s no extra cost. Why? Because the listing agent of the house or condo you purchase will split the sales commission with your buyer’s agent. Only in the rare event you buy a “for sale by owner” (FSBO) home and the seller refuses to compensate your buyer’s agent would you owe any sales commission.
EXPECT YOUR BUYER’S AGENT TO PREPARE A “CMA” BEFORE MAKING YOUR PURCHASE OFFER. When you find the property you want to buy, before making a purchase offer ask your buyer’s agent to prepare a written CMA (comparative market analysis). This CMA is the same form the listing agent prepared for the seller when the house or condo was listed for sale.
However, your CMA will be up to date, whereas the seller’s CMA might be several months old.
The CMA shows (a) recent comparable sales prices of nearby residences within the last few months (never older than six months); (b) current asking prices of similar neighborhood homes now on the market for sale; and (c) asking prices of recently expired comparable listings (usually overpriced).
As a savvy home buyer, you probably will have inspected many of the homes on your CMA. With the help of your buyer’s agent, you can use the CMA information to arrive at a fair purchase-price offer.
In the end, if the seller doesn’t accept your purchase offer, a luxury of buying during this slow season is there are few other home buyers in the market. You’re in control.
The result is you usually needn’t be in a rush to respond to a counteroffer or make a new purchase offer. Take your time, find the right mortgage loan and then the right residence.