Reposted in part from The Good Life Realty, Feb 22, 2016
No matter if you’re in a buyer’s or seller’s market, there are a few critical steps you can take to make a smarter purchase. Buying a home in Palm Springs, is not that much different then purchasing anywhere else in the US. Following these real estate tips, along with working with one of our expert Realtors, will help the process.
Know your buying power
Unless you're planning on paying cash for your property, knowing your buying power is critical before you start the whole search process. What is your buying power? It is the combination of your credit-worthiness and how much you can realistically pay for a home.
First, you need to understand the hidden costs of buying a home. You will need to save not only for the down payment of your home — which is typically between 10% – 20% of the offer price — but also for any additional transaction fees, such as transfer tax, PMI, title insurance, and escrow fees.
Then you need to know what you can realistically afford each month to understand how much house you can buy. Your mortgage rate will depend on your creditworthiness — if you have a high credit score, your lender will likely approve you for a lower mortgage rate, which can save you thousands of dollars per year in interest. A loan professional can help you figure out how much house you can afford.
Fix your credit with the help of a loan professional
According to CreditKarma, a good credit score is usually 720 or above. You want to clean up your credit as soon as you can, and definitely before you go to a lender for a loan preapproval. Get a loan professional to check your credit score for you. A professional can give you a clearer idea if your score is in the ‘good’ range, or if you need to do some credit cleanup before getting a mortgage preapproval.
Work with a knowledgeable local agent
Do you understand what kind of market you are buying into? Even within Palm Springs' city limits, there are micro markets that are increasing or decreasing in value.
That’s why it’s important to hire a highly competent real estate agent who knows the specific market you are interested in. Its important to make sure that the professional who you’re working with really understands what the market is like and will help you find the home that you desire.
Don’t try to time the market…
Even in a hot market, there’s never a perfect time to buy a home. It can take a while to know exactly what you like, and you may have to look at 10 or more homes before you can recognize what suits your lifestyle best. While you’re shopping, take photos of your favorite properties and the details that you liked the best so that you can remember what you liked.
When you start shopping, have an initial consultation with your realtor. Give them every single detail that you know about your lifestyle, buying power, needs, wants and desires for your home. Even if you don't exactly know what you want, your Realtor can help you sort out your priorities and narrow down your search to show you only the best homes that will interest you. The more detail you can provide, the easier it will be for them to help you find your future home. Our agents at The Paul Kaplan Group may also know of exclusive listings not available to the general public.
… But make the offer as soon as you find the right home
If you love it, make the offer. Otherwise, that dream home may disappear faster than you think. You can't imagine how many times clients find the desert home of their dreams- and maybe its been on the market for 200 days, but suddenly someone else decides they want the property too! Waiting even a few hours to write an offer, will often result in losing out.
Your buying agent should contact the listing agent before you submit an offer so that they can decide what’s important to include in the offer. If you’re serious about it, you want to increase the chances that your offer is accepted.
Show that you’re serious about the purchase by creating a buyer’s offer packet. It should include your lender’s preapproval letter, a screenshot of your down payment money in your bank account, or proof of assets if paying cash.
Get a home inspection
Once you’re in the negotiation process, it’s essential that you get a third-party inspector to run a thorough home inspection. The inspector will be looking for major structural issues, including problems with the foundation, plumbing, and electrical systems. Your inspector should be extra picky, pointing out the most minor faults.
Homes in California are typically sold "as-is." Make sure to have your inspections conducted during your inspection contingency period. If there are any major structural issues, you may be able to negotiate with the seller to repair them. Minor issues that you can repair on your own may also be points for negotiating a lower offer, however an inspection report is not necessarily a repair punch list for the seller. Unless it is in your contract, the seller may not be obligated to do any repairs; and if you decide the house is not in the condition you had expected, then you may often be able to cancel the contract- however always confirm with the terms of your contract.
Protect your credit before you close
Don’t raise any red flags with your creditworthiness in the weeks before closing.
- Keep your spending to a minimum and don’t make any major purchases before closing — that includes buying furniture, or a car, truck, or van, or any excessive charges on your credit card.
- Keep your bank accounts stable. Don’t change banks, spend any of the money you have set aside for closing, or make any large deposits to your accounts without checking with your loan officer first.
- Keep your employment situation stable — do not change jobs, quit your job, or become self-employed. Any sudden change in your income can have that preapproval offer rescinded.
- Do not cosign a loan for anyone. It will open an inquiry into your credit and add to your debt, which could raise your mortgage rate and cost you thousands of dollars over the life of the loan.
Looking for a home in Palm Springs? One of our experts at The Paul Kaplan Group will assist you in finding your desert dream home in the right neighborhood for you. Please click here to contact us.