Put a NEW HOME under the tree this year!

Best time to wrap up home shopping

The holiday season is a great time to be a buyer: There are fewer other buyers looking, and only motivated sellers have their home on the market.
Between Thanksgiving and New Year's Day, even through Super Bowl Sunday in many communities, few people think of buying a house or condominium. However, if you can drag yourself away from holiday festivities, it's the best time of the year to be a home buyer.
There are two reasons: Only serious, motivated sellers have their houses and condominiums listed for sale during this slowest time of year, and competition from other prospective home buyers is at its lowest, so your purchase offer will be extremely welcome and seriously considered.
And there's yet another reason why the end of 2006 is an especially good time to be a home buyer. In most cities, it's a buyer's market, meaning there are more homes listed than there are qualified buyers, so sellers (and their listing agents) are extremely anxious.
Shop for a mortgage first
However, before rushing out to buy a house or condo, smart buyers first get approved in writing for a home mortgage. This is a slow time of year for mortgage lenders, so they welcome loan applications.
Although 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 home mortgage pre-approvals 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." In other words, a mortgage pre-qualification is worthless.
However, home buyers should understand that a lender's mortgage pre-approval is subject to the lender's appraisal of the home you decide to buy, and reverification of your credit and income. So don't apply for additional credit or go out and buy a new car before you complete your home purchase.
Work with buyer's agent
After getting a written mortgage pre-approval from a lender, the next step is to work with an experienced buyer's agent who understands the market in question.
Ask friends, relatives and business associates for recommendations of buyer's agents. Although any licensed agent can be your buyer's agent, many agents prefer to list homes for sale rather than working with home buyers, who can be "time wasters."
A buyer's agent costs nothing extra. 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" home and the seller refuses to compensate your buyer's agent would you owe any sales commission.
Comparative market analysis
When you find the house or the condo you want to buy, before making a purchase offer ask your buyer's agent to prepare a written CMA (comparative market analysis). This analysis is the same form the listing agent prepared for the seller when the house or condo was listed for sale.
However, your analysis will be up to date, whereas the seller's market analysis might be several months old. The analysis shows recent sale prices of comparable nearby residences (never older than six months), current asking prices of similar neighborhood homes and asking prices of recently expired comparable listings (usually overpriced).
As a savvy home buyer, you probably will have inspected many of the homes on the analysis. With the help of your buyer's agent, you can use the CMA information to arrive at a fair purchase-price offer.
Many buyer's agents recommend making a purchase offer based on a per-square-foot basis. For example, if nearby homes of comparable quality construction recently sold for $150 per square foot, you might want to make your purchase offer based on $150 per square foot.
Be sure to attach a reasonable good-faith deposit check to your purchase offer. If you are making an offer far under the seller's asking price, a substantial deposit accompanying it will often assure the seller that you are a serious buyer.
You can be sure your buyer's agent will use the CMA prepared for your use to show the home seller and the listing agent that your purchase offer is reasonable.
However, if the seller doesn't accept your purchase offer, a luxury of buying during this slow season is that there are few other home buyers in the market. You usually needn't be in a rush to respond to a counteroffer or make a new purchase offer.
Waiting a few days to respond, presuming you still want to buy the residence, will often make the seller think, "That was a pretty good offer. Maybe I should have accepted it."
Keep your offer simple
As experienced buyer's agents will tell you, it's best to keep your purchase offer as simple as possible. "A confused mind usually says no" is a very true motto. So include only a few contingency clauses in your purchase offer. Typical contingencies are:
1. Lender's appraisal contingency. Presuming you need a mortgage to finance your purchase, be sure to include a lender's appraisal contingency clause in the purchase offer. If the home doesn't appraise for at least the amount of your purchase offer as accepted by the seller, then you don't have to complete the purchase and can get your good-faith deposit fully refunded.
2. Professional home inspection contingency. Smart buyers make purchase offers contingent on their approval of a professional home inspector's report to be obtained by the buyer after the seller accepts the purchase offer.
The cost is usually around $300. Buyers should always accompany the inspector for the two- to three-hour inspection, because it is a good way to become familiar with the home and to discuss any unexpected material defects that are discovered.
A good approach for home inspection is to hire a member of the American Society of Home Inspectors (ASHI). To find local ASHI inspectors, go to www.ashi.org or phone 1-800-743-2744.
If the professional inspection report reveals serious undisclosed home defects, as the buyer you can cancel the purchase and obtain refund of your good-faith deposit, reopen negotiations with the seller to obtain a repair credit, or if the seller refuses to renegotiate, go ahead with the purchase anyway (presuming you want the home to that extent).
3. Sale of your current home contingency. During the past few years of a seller's market in most cities, this contingency fell out of favor with sellers and agents. But amid a buyer's market, many sellers will accept a purchase offer contingent on the buyer's sale of their current home.
However, to be fair to the seller, most sellers will insist on keeping their homes listed on the market while the buyer tries to sell his/her current home. In addition, most realty agents suggest a 48-hour or 72-hour contingency-release clause. That means if another buyer produces an offer acceptable to the seller, the first buyer then has 48 or 72 hours to remove his/her contingency clause for sale of their current residence.