Home Buyers Nice and Naughty List

December 15, 2021

As we approach the end of the year, many sellers question if now is the best time to sell. We can say there are many buyers out there, serious buyers, that need homes! 

The end of the year brings out the most serious buyers because nobody wants to move when it's snowing and cold outside. 


What we do want to address is being a nice and naughty buyer. Don't end up on the naughty list. 


Find out what list you are on below.


Get pre-approved

The worst thing we've heard agents say is, "yes, we can take you to that house. We will figure out the finances later."


This can be detrimental to your home search process. Because the market is moving so fast, that home you loved will be gone by the time you submit your proof of funds or pre-approval letter. 

Many sellers won't entertain offers that do not have one of those included with your offer submission. With investors buying up homes and people moving from out of state with money to spend, you must have your ducks in a row. 


The second worst thing we've had buyers experience is looking at homes they cannot afford because they didn't know what they qualified for. Many people don't know that when you are looking online, at Zillow, for example, they automatically assume you will put 20% down on a home. 


Now we've learned the average amount a buyer is putting down is closer to 13%, and the average is 7% for a first-time buyer. 

When you plug in the new downpayment amount, that number will be significantly different.

You might be able to afford the monthly payment, but that does not mean you have the cash saved up for a downpayment.  


Know what you want

Put together a list of non-negotiable items and things that you would like to have in your home. When you start to think about what's most important to you when it comes to your new home, think about what you need right now and give some thought into the near future. Now you will also want to write down what type of property, size and features, as well as condition or age of the home. 


Here are a few questions to ask yourself about the future

  • Are you thinking about kids? Maybe you already have one, but what about adding another?
  • Do you want them to share a room or individual rooms and perhaps a playroom?
  • Are there specific school districts you want your child to go to
  • Are you working from home or going back to the office?
  • What is your ideal work commute?
  • Are you looking for a move-in ready or wanting to do a little renovation project?
  • Is a family member potentially in need of moving in with you?
  • What ideal neighborhood do you want to live in?
  • Two-story or single-story?
  • Open floor plan?
  • What size backyard are you looking for? Do you need an outdoor living space?

As you start to jot down your list, it's essential to get the buy-in from others in the family, what is important to them and what would make them most comfortable in the new home.

We have a helpful page to walk you through this process, email mackinzie.ross@kw.com for the pdf. 


Searching on any website

You would think everyone has the same information. Fun fact not everyone does. Some home search sites will fetch new data every 24-48 hours, and some require the agent to sign in to their portal and update if the home is under contract! 

There are special programs agents can purchase to set you up on a customized home search portal to search for your dream home. 

We have an outstanding artificial intelligence (AI) program that learns as you search. You like open kitchens with a lot of natural light, and this program will scan photos and information and pull more homes with those similar features and serve them to you. 

Hate small backyards with lots of landscape, and it will serve you large backyards with less landscape or xeriscape or zeroscape.

It also pulls information directly from our MLS or multiple listing service so that you get the most accurate up to date information. 


Hire an agent -- but not ANY agent

Silly right. I know—shameless plug in a sense. BUT we cannot stress enough why an agent and not just your sister's friend who does this part-time is important. 

Knowing what is actually going on in the market takes working the market to understand—here's a little story to explain what we mean.


Last year we represented a listing, and two buyers submitted offers on this property. 

One at asking and one 10% over asking. Obviously, our sellers went with the 10% over asking, while the other buyer missed their opportunity. The agent called us later and asked for feedback on why her buyer didn't get the house because this was "the" home. We, in turn, asked if this buyer had room to negotiate above asking. The buyer's agent said yes, they could pay x amount over asking and were willing to. 

We were SHOCKED! 

You allowed your buyer's dream home to walk away because you did not educate them on the importance of this market and how it would affect them going in at asking. 

This agent had no homes listed this year and helped two people buy in early 2021. 

Education and working in the business EVERY day matters. 

This buyer could have had their dream home if the agent had expressed the importance of our current market and why they needed to submit their best offer first. But if you are not working in the market, you have no idea what you need to educate your buyers or sellers. 


Don't buy (insert anything) before you close 

Still, we hear of nightmare stories that buyers go out and buy a car the night before closing. -- again with the education moment.


You cannot buy a car before closing! 

You cannot purchase that couch on credit before closing! 

You cannot buy new flooring on credit before you close! 

You also cannot open a credit card before you close! 

You should not put large amounts of money on your credit card before you close! 


DO NOT BUY ANYTHING BEFORE CLOSING! 


Wait until after your home closes to purchase anything. An additional line of credit could be the difference between having that home or having a super cool car and no home. 


It's SO important you work with your agent and lender during this process and discuss any upcoming additional credit card charges and new lines of credit during your escrow process before you make that choice. 


Some buyers CAN purchase a car and a house at the same time. And they have ad this discussion with their lender and have received the green light. 


But to stay on the safe side, just skip doing it before you close and do it after you close on your new home. That's if you can genuinely afford it, and it won't break the bank. 



You don't have to look at every house that comes on the market

You might want to see every house, but this goes back to knowing what you want. You will not be as overwhelmed by the process when you know what you want. The average buyer looks at about 8 homes during their home search process, and we would like to say our buyers look at 5 houses on average before making an offer. 


We know the process of looking at houses can be enjoyable. Shoot, we LOVE looking at homes, but nothing is worse than looking at 15 houses, hating them all, and giving up on the process because there were too many options, and they were all different. 


There will always be new homes that come on the market, and you will think you need to look at them. But if you hate two-stories and do not want to live in Sparks. That upgraded two-story in Sparks will not just become ok, because it's "upgraded." You will still hate Sparks and hate the idea of walking up and down stairs every day. 


Plan for a few upfront costs in addition to your down payment

Your downpayment will make up a significant amount of your closing costs, but many buyers don't think about the expenses during the transaction.


Here are a few expenses that you will run into during the escrow process.

  • Earnest Money Deposit or EMD -- typically $2,000
  • Inspections -- 

    • Home -- size dependant - $200 - $600
    • Pest -- $200 
    • Heating and cooling -- $300
  • Appraisal - Up to $1000, $600 is what we are typically seeing
  • Home warranty (optional) - $500
  • Lender fees -- 1% of purchase price 
  • Title and Escrow Fee -- property dependant
  • Taxes -- about $1350 depends on the home
  • Homeowners insurance is upfront property dependant

Plan for about 1.5%- 3% of the purchase price. Each house and lender has specifics so that you will get a good idea of the cost breakdown, but you will be safe if you plan for 1.5 - 3%. 


Now those numbers might sound daunting, but this is why going through your finances and meeting with your mortgage lender is essential. 


We want you to stay off the naughty list this year, so reach out to us, and we would be happy to schedule a time to talk all things about buying a home.