Even if you are a cash buyer, find out your options. Financing (mortgage qualification and terms) are the first step in the home buying process. Really! Most people think they can afford a certain amount of money and they are usually wrong. Some can afford more than they thought, and some less. A qualified mortgage broker will tell you if you are eligible to buy immediately or what changes need to be worked on to qualify in the future, how much you can spend, and what your interest rate and monthly payments will be. Without this knowledge, you are on a blind and costly search to your new home. There is nothing worse than finding your dream home only to find out you can’t qualify for a mortgage at this time, or for this amount of money. Don’t waste your time and energy! Mortgage pre-qualification is often a free service that takes less than a half an hour. Call your local mortgage broker, or visit your local bank branch and get qualified before the search. Most experience real estate agents need to see your letter of qualification before searching, and you will definitely need this letter to show any seller when making offers on a property.
Many Buyers tell me they can spend X amount monthly for their mortgage, and I always ask them how much they can spend for homeowner association maintenance fees, insurance, taxes, lawn care, cable and all other household expenses. The general repy to this question is that they never considered it. Buying a home wih a mortgage will cost you 1% to 1.5% of the purchase price monthly to run the home. An example…a $300,000 home may cost you $3,000 to $4,500 a month if you include all the extra expenses. If you are buying all cash, then expect the same expenses minus the mortgage. Your total expense may be double the mortgage payment you were quoted. Plan for it!
Most contracts have an inspection period, use it! Don’t call your uncle, of friend’s dad, call a licensed inspection company who will give you a detailed report with cost estimates of repairs. This is the only way to know the true history of the house. Also, the written report may help you negotiate your contract price if there is extensive damage.
I always tell buyers of a new construction home to do a professional inspection. Usually, there are a list of minor punch list repairs needed that are often covered by the builder’s waranttee. For older homes, expect a longer list. Most items will be petty, but can add up. Usually, these items in need of repair are due to deffered maintenance from the seller. The biggest red flags to negotiate with a seller are air conditioning, roof, termite, plumbing, mold and electrical issues. Cosmetic issues are rarely warranted or negotiable. A normal house inspection for a resale home will have 1% to 2% total repair cost of the purchase price. An example…a $300,000 house may have $3,000 to $6,000 in minor total repairs after an inspection. This would be acceptable. Anything higher should be considered and negotiated.
This is a free service to Buyers in most areas. Take advantage of it! Let me dispel all the common myths out there. You are not getting a better deal “By Owner” because they are saving commission. The Seller already added that saving in their price. Also, the best deals are gotten when you have an arms length transaction with a third party who experienced, and armed with facts and research is negotiating the best price and terms for you. This person is a real estate agent. The next popular myth is that you are getting a better deal going direct to the listing agent. So you look online and at signs, and call the listing agent direct for the best deal. Another fail. The listing agent gets paid by the Seller. Therefore, there interest is to get the highest price for their commission and their Seller. Also, they usually have formed a relationship with the Seller during the time they are selling the house, and will not want to work against the Seller negotiating for the Buyer who is not paying them. Lastly, the listing agent is getting the same commission as if you have your own real estate agent negotiating on your behalf. Seller does not usually same any money you were hoping would be passed on to you, the buyer. Get your own real estate agent, who is experienced and a great negotiator to help you find the best home for the right price.
photo courtesy of Rachel Sian
Damara Cohn is the Founder, Owner and Broker of Mangrove Realty, Inc. Mrs. Cohn is originally from Queens, New York. She relocated with her family during her school years to Boca Raton, FL. Damara Cohn is a graduate of the University of Central Florida, and is a Florida Resident and Palm Beach County Resident for the past twenty-five years. Mrs. Cohn has been a real estate professional for over fifteen years in South East Florida. Her experience includes residential real estate sales and rentals, commercial real estate sales and leasing, foreclosure sales, lender representation, agent training, short sales, and investor consulting. She has won numerous sales and marketing awards, including the prestigious Realtor.com Technology Award and Realty Alliance National Sales Award. Damara Cohn is also a Certified Short Sale Agent who has helped many homeowners in their hardest of times. Mrs. Cohn has also been the official Realtor, and Mangrove Realty, Inc., the official brokerage to the City of Delray Beach and Delray Beach CRA. She still actively helps the these agencies along with the Delray Beach Land Trust and Delray Beach Housing Authority, acquire and sell properties for their numerous programs. Additionally, she is a long standing member of the Florida Association of Realtors, National Association of Realtors, Palm Beach Board of Realtors, and Beaches MLS. Delray Beach is home to Damara Cohn for the past eleven years, and her real estate brokerage, Mangrove Realty, Inc., for the past six years. Mrs. Cohn and her family are active in the Delray Beach Community. Her children attend a Delray Beach public school where she is active in the PTA and school sponsorship. Mrs. Cohn main goal has always been to help people achieve their dreams, and she continues to do this with a passion every single day. 561-637-4559 Damara@MangroveRealty.com