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Top Tips for 1st-Time Home Buyers in Kitsap County WA – Tip No. 1

“Don’t Bite Off More Than You Can Chew!”

As a licensed professional real estate broker here on the Kitsap Peninsula, perhaps one of the best bits of advice I normally dispense to 1st-Time Home Buyers is for them to stay within their means. By that, I mean, determine your workable budget for purchasing your house, and stick to it.

I have the pleasure of working with lots of 1st-Time Home Buyers, especially Active-Duty Military Service Members and their families. Kitsap County WA is home to a number of U.S. Naval installations, like Bangor Submarine Base, Puget Sound Naval Shipyard, and Naval Undersea Warfare Center Keyport.

Unfortunately, it’s easy for 1st-Time Buyers to get caught up in the excitement of purchasing their first home and lose sight of their budget. Especially if you’re working with an agent/broker that likes to push the budget envelope and show you houses just beyond your financial reach, like dangling a carrot in front of a horse.

When you meet with your mortgage consultant to obtain pre-approval for your loan, they usually establish a price range or maximum amount of money you’re qualified to borrow, based on your credit and debt-to-income ratio. This is the figure that drives your home-searching process.

Normally, when I meet with 1st-Time Buyers (or any Buyers for that matter), they’ve already been fully pre-approved by their mortgage lender and the price range/limit has been determined. Taking that number, I begin my searching process, scouring the Northwest MLS for homes that meet their needs/requirements. I may increase the listing price criteria slightly, depending on the price point, in hopes of finding properties that have been languishing on the market for a while, and might be potential candidates for a price reduction.

But when it comes to finding ‘the’ right home for my Buyers and putting in an offer, I attempt to negotiate a contract price that is below their qualified loan amount.

First-Time Buyers are usually young singles or married couples, just starting out in their careers. The last thing they need is a huge sucking black hole mortgage payment that robs them of their ability to enjoy life.

But it’s just so tempting to push the limits of your limit, especially when you are looking at homes that are outside of your range. The houses you can’t afford are always much more fun and attractive than the ones you can afford. You try to convince yourself that you ‘deserve’ the perks of a higher-priced home. With that promotion you’re sure to get in the next couple of years, a couple hundred dollars more a month won’t matter. Right?

Well, my advice to 1st-Time Home Buyers here in Kitsap County WA is this, “Don’t Bite off more House than You can comfortably pay for!” Find a home that serves your purposes and doesn’t force you to eat a steady diet of rice and beans. When you own your first home, don’t let it own you!

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Rich Jacobson is a licensed real estate broker providing Knowledgeable Empowerment and Relentless Representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com, ActiveRain, Everyday CK, HomesByHarbors, and Crabbing in the Hood, or e-mail:  kitsapagent@gmail.com

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In the Gospel according to Luke, we find the following saying:

“Do to others as you would have them do to you.”    Luke 6:31

This verse provides the basis for what many refer to as ‘The Golden Rule‘ or the Ethic of Reciprocity, which states one has a right or expectation to receive fair and just treatment, and a responsibility to offer similar fair and just treatment towards others.

Just recently, I had the pleasure of representing a 1st Time Home Buyer in the purchase of a property in West Bremerton WA. Overall, it was a fairly smooth transaction. I had the good fortune of working with the Listing Agent previously and knew her to be a very competent professional, as well as a strong advocate for her clients.

We navigated through the inspection process, where the Sellers kindly accepted to remedy all of the items the Buyers had requested. The required work was performed promptly and copies of relevant receipts were provided.

The weekend before closing, I performed a final walk-through with my Buyer to visually verify that all work had been performed. The Sellers were busily packing the last few loads of household effects, so we could meet our Monday closing deadline.

On the day of closing, after receiving notification from escrow that the contract had funded and recorded, I turned the keys over to my joyful and excited Buyer, who immediately began the process of moving into her first home!

Imagine her disappointment at finding the home in less than ‘move-in’ condition. It was clear that the Sellers had made very little, if any, efforts at cleaning the home after removing their belongings. Even the most basic tasks of vacuuming and sweeping had been neglected. After several days delay and several hundred dollars paid-out for cleaning expenses, my Buyer was finally able to move in.

Let’s face it, the relocation process can be a very hectic and stressful time for both Buyers and Sellers. There can be instances where time or travel constraints can prohibit us from ensuring that the home is left in reasonable move-in condition. In such situations, Sellers should be advised to budget for professional cleaning services paid out of escrow, or to provide the Buyers with a credit at closing to cover such expenses.

Both Buyers and Sellers (and their Agents) need to remember and apply the Golden Rule:

“Do to others as you would have them do to you.”    Luke 6:31 

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In our last episode, Bill and Betty Buyer were sitting down with their trusty Agent, Realtor Ron, to draft an offer on their dream home. They had spent the past 3 weekends touring dozens of potential properties, when they finally found just the perfect place!.

When it came time to discuss the offer price, Bill proudly asserted, “We’re going to offer them $50K below the Listing price, and ask them to pay closing costs too!”

Pulling his jaw off the floor, Realtor Ron looked down on the MLS data-sheet for the subject property.

“Their home has only been on the market for less than two weeks,” Realtor Ron stated.

Pulling up statistics for  several comparable properties in the same neighborhood that had sold in the past month, Realtor Ron showed the Buyers how the property was actually priced very aggressively, below many of the most recent sales. In addition, a quick check on the County Website revealed that the home was priced just below the property tax assessed valuation as well.

“But it’s a ‘Buyer’s Market,” responded Betty Buyer, “Aren’t all  Sellers desperate?”

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There is this tendency when the market softens and slows down for Buyers to expect greater bargaining leverage when it comes to home sales prices.

In the event that you, as a Buyer, decide to offer less than the asking price, there are definitely some strategies you can employ that will help to improve your chances for success.

Just understand that each property and Seller presents a unique set of circumstances, and each needs to be considered separately.

The offer price is just one element to a contract offer, albeit the most predominant. The key to being successful in offering less than asking price is to strengthen all of the other elements of the offer. Here are some suggestions:

1.   Cash Buyer:   Obviously, the old adage ‘Money Talks’ still bears true today. Cash Buyers will almost always have the greatest degree of negotiating power in a real estate transaction. But let’s face it, the overwhelming majority of Buyers today require some amount of financing.

2.   Letter of Loan Pre-Approval:    Okay, so if you’re in the clear majority, and plan on using a mortgage loan to purchase the house, then you need to effectively convey/communicate your financial solvency and ability to satisfy the contract. One way this is accomplished is through an official Letter of Loan Pre-Approval furnished by your mortgage lender (always make them ‘address specific’ and not ‘dollar amount’ specific).

3.   Letter of Buyer Introduction:   Another method I have found to be effective is to draft a Letter of Introduction about my Buyers that serves to put ‘flesh’ on the offer. It helps to divert the attention away from ‘dollars & cents’ and puts the focus on real people trying to achieve their dreams. I know, it sounds corny, but trust me, it works.

3.   Earnest Money:   One of the purposes behind offering earnest money is to demonstrate the seriousness of your intent to purchase. It makes a statement to the Seller about how much you want their home. If you’re going to be skimpy on the offer price, then soothe the wound with a hefty earnest money deposit.

4.   Make it a ‘Clean’ offer:   Make your offer as straight-forward and with the least amount of ‘hoop-jumping’ as possible. This means eliminating or reducing any redundant contingencies or addendum.

5.   Other Seller Considerations:   One of the things I always ask the Listing Agent before drafting an offer is “Are there any other considerations besides price that are important to the Sellers?” You’d be amazed at what is important to some Sellers other than the sales price. Some want an accelerated closing. Others a delayed or extended closing. Sometimes accommodation to these other considerations can make a huge difference.

This is, by no means, an exhaustive list of elements you can vary or strengthen to better position yourself when submitting a low offer. In the next installment, we’ll talk about the risks associated with submitting a low offer.

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Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com and Crabbing in the Hood.

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Just about everyone enjoys finding a bargain. My kids love shopping at the local Value Village over in East Bremerton WA. The last time I was there with my son, Luke, I found a really nice leather dress belt in mint condition for only $2.99 that normally retails for around $50!

There is this tendency when the market softens and slows down for Buyers to expect greater bargaining leverage when it comes to home sales prices.

Typically, when a market shift takes place that favors the Buyer (commonly referred to as a ‘Buyer’s Market), there is high level of inventory of homes available for purchase. At the same time, as ‘Days on Market’ increase (the number of days on average that it takes for a house to sell/close), Sellers begin to reduce or discount their listing price. Add to that the number of recent short sales and foreclosures that have occurred due to our current economic conditions, and you have the potential for finding  some really excellent bargains for today’s Buyers.

However, regardless of how current market dynamics favor Buyers, one should never assume that every Seller is equally desperate to make pricing concessions. Each property must be evaluated on its own unique merits. The basic questions Buyers need to ask are:

1.   How long has the home been on the market?

2.   Is the house priced aggressively, according to current market value?

3.   What have comparable homes in the immediate area sold for in the past 1 to 3 months?

The answers to these questions can help to dictate whether or not a lower price offer is reasonable or realistic. If the home has been on the market for any length of time without a price reduction or without much showing activity, chances are the Sellers might be more motivated in making a concession. If the home wasn’t priced right at the start, accordingly market value, then the Sellers might be coming to the point where they realize an adjustment might be necessary. A brief market analysis should be able to determine if the home is priced correctly.

In the event that a Buyer decides to offer less than the asking price, there are definitely some strategies you can employ that will help to improve your chances for success.

The offer price is just one element to a contract offer, albeit the most predominant. The key to being successful in offering less than asking price is to strengthen all of the other elements of the offer.

We’ll cover those other elements in the next installment, so stay tuned!

~     o     ~     o     ~     o     ~     o     ~     o     ~

Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com and Crabbing in the Hood.

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