Buyer FAQ

A great home in pristine condition may get scooped up hours after being listed. So when competition is fierce, you need to make your offer stand out from your competitors' offers. To increase the likelihood that a seller accepts your offer, consider adopting one or more of these strategies:

Price. Obviously, price tends to be the primary consideration for sellers. In a hot market, when buyers outnumber inventory, offers often come in at full price or above. When you're competing for a home, to get an edge, think about adding a clause stating that you will beat the highest offer by "x" dollars up to "x" amount. Cash offers can be more attractive to sellers as well. Although sellers will receive their money at closing whether buyers pay with cash or take out a loan, cash offers don't require lender approval. And loan approval is never a certainty-it may delay closing.

Financing. It's not enough to be pre-qualified. Pre-qualification only tells how much you can afford. Pre-approval goes a step further. Your lender will thoroughly evaluate your application-including verifying employment information and financial disposition-then clear you for a loan of a determined amount. Having your loan pre-approved gives you a sizeable advantage by putting you on equal footing with cash buyers.

Good Faith Deposit. Buyers offering a larger-than-customary amount of "earnest money," a deposit that accompanies an offer, may get a seller's attention. By committing more money up front, buyers demonstrate greater sincerity and motivation to close the transaction. Your real estate professional can guide you as to the appropriate sum for your specific transaction.

Contingencies. Consider minimizing contingencies, those clauses that allow buyers to back out of a contract if certain conditions are not met. For example, it's common for buyers to make the purchase contingent upon their securing satisfactory financing. Obviously, offers with the fewest conditions tend to be more attractive to sellers.

From a contingency standpoint, first-time buyers are often better prospects for a seller's home than move-up buyers. Here's why: Very often, buyers' offers are contingent upon the sale of their present home. Even if a move-up buyer has an offer in hand, that buyer's offer may be contingent on another contingency, and so on down the line. If one transaction derails, they all might.

Relationship. Help the seller get to know and identify with you by looking for ways to connect. For instance, it may be through a shared appreciation of a certain style of architecture. Let's say that you're fortunate enough to find yourself competing for an original Frank Lloyd Wright-designed home. After hearing about your visit to Taliesin West, Wright's desert home, and your collection of Wright-inspired furniture, the seller might be persuaded that you should be the next custodian of this national treasure. Of course, the connection could be something more conventional such as a shared love of gardening. You'll want to persuade the seller that his prize roses will be well tended.

Naturally, sellers would like to receive top dollar for their home, but remember, they also want an easy, trouble-free transaction. Thus, as a rule, the fewer the contingencies and the greater the commitment, the more attractive your offer may look.

To obtain the most professional representation available, contact an agent at your local Cobblestone Realty office today.

My Credit Is Less than Perfect. Can I Still Buy a Home?

Perhaps in recent years, you've had financial difficulties that caused you to make a few late payments to creditors or even possibly not pay some bills at all. You may have even had to file for bankruptcy. Now your difficulties are over and you want to buy a home. Will it be possible to get a home loan with a blemished credit history? Although it may be a little harder than if you had A+ credit, the answer is yes.

One of the first things you want to do is order a credit report. There are three main credit reporting agencies: Equifax (800-685-1111), Experian (888-397-3742), and Trans Union (800-888-4213). [Because not all creditors report information to the same agencies, you may want to request a report from all three.] Once you have the report in hand, study it to make sure that the information is accurate. If there are discrepancies, make sure you follow the steps provided by the credit reporting agency to dispute the information and get it changed. In addition, you may want to add a consumer statement on your credit report to explain any late or non-payment to creditors.

Depending on how damaged your credit is, you may want to put off buying a home for another year. Use that time to repair your credit by paying off creditors and create a history of paying your bills on time and consistently.

When you are ready to apply for a loan, realize that your previous credit history may limit your eligibility for prime loans and low interest rates. When lenders are deciding on whether to issue a potential borrower a loan, they use various criteria in addition to payment history to evaluate the borrower such as employment, income, assets and liabilities. Based on this evaluation, borrowers are offered loans rated on a scale from A to D. The more damaged your credit history, the higher of a risk you are to lenders.

Because of your blemished credit history, you will more than likely have to get a "sub-prime" loan. These types of loans come with higher interest rates and more points. Don't assume that just because a lender offers sub-prime loans, that you will automatically be embraced. Be prepared to explain to the lender why you had credit problems and what you have done to prevent the situation from occurring in the future.

Remember your past financial problems don't have to stop you from experiencing the joys of homeownership.

To learn more about home financing, contact Todd Kooi at Compass Bank. For more information on the home buying process, contact a Cobblestone Realty Realtor near you. 

Want to Invest in Real Estate But Not Live In It?

Turn on any financial news program and at some point you'll hear the experts extolling the virtues of diversification. Real estate has long been considered a conservative, long-term strategy to growing wealth. While some seasoned real estate investors make it look easy, to be successful, beginners should follow some basic principles.
  • Learn all you can. Before committing your cash, you should have a fundamental understanding of real estate. For example, be aware that, in general, investment properties are not liquid investments. Barring exceptional circumstances, real estate does not sell at a moment's notice. It could take days or months to sell a property, depending on the strength of the market in a particular region.
  • Consider cash flow. You'll need to have enough capital on hand to cover any short-term losses due to vacancies between tenants.
  • Start small. Look into buying a single family home or a duplex. Leave large apartment buildings and commercial properties to the pros.
  • Inquire at the local Chamber of Commerce about companies relocating into or out of the area. Company movement is one indicator of demand for rental and/or office space.
  • Find a property that will be in demand. Look for a moderately priced home with three or four bedrooms, two bathrooms, and a garage that sits on a quiet street.
  • Research the property. The most common way first-time investors lose is by failing to investigate a property thoroughly. Look beyond the front door. Investigate the reputation of the school district, the crime rate, and plans for expanding a nearby highway or developing vacant land. Ask a Cobblestone Realty associate about the area, its history, and how fast (or slow) properties are moving.
  • Inspect the home you're considering for signs of water damage, such as stains on the ceiling and crinkling or gathering wallpaper; open and close every door and window; and check all electrical sockets by plugging in an appliance. Get an independent home inspection, roof inspection and termite inspection. Unexpected repair costs can eat away resale profit. Because even the best inspection can't always predict problems, try to set aside some of the rental income for unexpected repairs.
  • Spend time driving the streets of the neighborhood noting the condition of other properties. Are lawns maintained? Are roofs in good shape? Are homes kept up?
  • Be ready to make fixes quickly and respond to the renter's needs. If you're not prepared to be a hands-on landlord, consider hiring a property management firm. Remember, investing in a property is much different than living in one, and while emotion and attachment can be prime motivators when it comes to homes, it is return on investment that counts when investing in real estate.

Are There Any Questions I Should Be Sure to Ask Before Making An Offer?

When you are buying a home, there are many problems that the seller is obligated to disclose. For example, in most states, it is illegal to withhold information about major physical defects on the property, and according to the Residential Lead-Based Paint Hazard Reduction Act (U.S. Code §4852d), anyone selling a house built prior to 1978 must disclose all known lead-based paint and hazards in the house. But, these disclosures don't always paint the entire picture of the home. Here are six questions you may want to ask that can offer additional insight about the prospective home before you make a final decision.

1) Why is the seller selling the house?
This question may help you evaluate the "real value" of the property. Is there something about the house the seller does not like? If so, you may be able to adjust the purchase offer accordingly.

2) How much did the seller pay for the home?
This question can, in some instances, help the buyer negotiate a better deal-maybe even get the seller to carry part of the loan. However, it is important to remember that the purchase price is influenced by several factors, like the current market value and any improvements the seller may have made to the home. The original purchase price might not have anything to do with the current value of the house.

3) What does the seller like most and least about the property?
By asking the seller what he or she likes most and least about the property, you might get some interesting information. In a few cases, what a seller likes the most about a home might actually be something the buyer is looking to avoid. For example, if the seller describes his house as being in a "happening neighborhood," the buyer might consider this a negative factor because the area may be too noisy or busy for his or her taste.

4) Has the seller had any problems with the home in the past?
It is also a good idea to ask the seller if he or she has had any problems with the home while living there. Has the seller had problems with a leakage from the upstairs bedroom in the past? If so, even if the leak has been corrected, the floor and walls around the bathroom might have been damaged. You should also check that these items were repaired properly.

5) Are there any nuisances or problem neighbors?
Use this answer to find out about any noisy neighbors, barking dogs, heavy airplane traffic or even planned changes to the neighborhood, such as a planned street widening. This may give you insight on why the seller is really moving.

6) How are the public schools in the area?
Because the value of a neighborhood is usually greatly influenced by the public schools in the area, finding out the buyer's perception can give you some insight about the quality of the area's schools.

Knowing all you can about a prospective home, not only helps you decide if it's the home of your dreams, but what offer to make as well. Your Cobblestone Realty real estate professional can help you get your key questions answered and give you advice on how to evaluate your findings. Click here to find a Cobblestone Realty Agent.


Presented by Kevin K. Barrier
The Kevin Barrier Team
Cobblestone Realty, LLC
3131 S. College Avenue Fort Collins, CO

Ph. (970) 430-5150   Direct:  970-310-3450