Buying a home – How to prepare in today’s Hot Market
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Buying a home? you may have heard it’s a tough market for buyers. Welcome to the Wild Wild West. If you want an ice cube’s chance in hell to compete and buy a home right now especially here in Montgomery County Maryland read carefully. Don’t even think about submitting an offer unless you’ve done everything discussed here. Do it the right way, do it first before looking at homes and when you find a home be the first to submit your offer.
Your lender letter– this goes well beyond taking application. All of your assets and income documentation submitted. Bank statements W-2 tax return pay stubs and anything else you were lender requests.
You don’t want a lender who has a phone conversation with you and then tell you you’re good to go… If they are willing to give you a letter after only doing this oh, run do not walk away as fast as you can.
Tell your lender you want a fully underwritten approval. A commitment letter that is only pending the property that you find. And pending the title work and Appraisal. This is as close that you will get to paying cash. Guess what you can now submit an offer on a property with settlement 2 weeks later. Not a month later. Even a cash deal can take up to two weeks since the title work can take up to 10 days to get back.
Discuss with your agent what contingencies you must have and what are you willing to waive. By law sellers in Montgomery County Maryland must have a radon test performed. You are to be provided this Report. You can put in the Contract that you, the Buyer will take care of it. It will cost you about $150. But it’s a nice touch to save the seller the trouble
Inspection contingency – I can’t advise you not to get one. Although the newer the home the less the odds are something bad will happen. That’s up to you and your agent to decide. You can make it for informational purposes only. That way you have it done and you get it back and review it. You won’t have the opportunity to ask the seller to pay for anything but, you can void the contract if it looks like there’s too much that needs to be addressed. It’s also a huge help so you know exactly what you want to fix (especially safety issues) before you move in. On newer properties I’m seeing more and more inspection contingencies getting waived. Actually not even newer properties but properties that appear in good condition. I’m seeing people bring someone with them who is knowledgeable with the utilities and HVAC system. You can find out the year certain appliances and utilities were built. Also find out how old the roof is.
Some bring an Inspector with them for this pre-inspection.I would do no more than 7 days for this inspection contingency.
Appraisal contingency– ask your lender how much time they need. Right now 15 days should be adequate. If you’re trying to do a 2-week settlement you’ll need to pay extra for a rush appraisal and get it back in 7 days.
Earnest money deposit– to have a valid contract, Consideration must be given. Give a strong deposit amount to help strengthen your contract. At least 5%. On a $500,000 sales price give a $25,000 earnest money deposit. This is all accounted for in the final numbers at closing.
You will get a few days once the contract is ratified to get your EMD money deposited with the real estate broker or, I like to deposit with the Title Company.
Make sure your lender calls the Listing Agent the moment your offer is delivered. It’s very important they have a discussion and the lender can address the offer itself and if the listing agent has any questions or concerns. This goes a long way to helping your offer and not enough lenders do this.
TRY TO BE FIRST. In this market it’s not mattering as much anymore… but still it’s another piece that will help. Stay on top of your agent. Keep bugging them. Keep this offer at top of mind for your agent.
With all this work and effort you will still face a tough battle. offer what you need to offer but be okay with walking away at a certain price. Doing everything discussed here will give you the best chance possible to land your home. Once you’ve done all this work on your First Offer it will be much easier on the next ones… And you can keep trying and trying until you succeed.
Hang in there and keep your head up and do your best not to get discouraged!