"I want a pool," she'd say. "And his and her walk-in closets."
"I want a wine cellar," he'd say. "And a three-car garage."
This would go on for a weeks until my buyers had finally fixed their sights on the property of their dreams. An $850,000 beauty near the Grove. We then began the process of submitting an offer and the other items needed for them to be seriously considered by the seller. Then came the bad news:
The buyer's lender informed us they only qualified for a purchase of up to $500,000. My buyers were devastated. And now a $500,000 home looked awful to them. The champagne dream bubbles over their heads popped, and they resigned themselves to give up and go back to renting.
I used to just hop into my car with buyers who had no pre-approval from a lender. Not anymore.
Let's change the above scenario and imagine that I had convinced my buyers up front, before we even looked at one house, to get pre-approved, AND they agreed. Lender tells them $500,000 is the maximum purchase amount. We narrow our search and only look at homes within their budget (sans the pool and million dollar views). My clients don't fixate on totally remodeled homes or fancy garages. But we talk about the possibilities of what you can do with your first home, and that is always an exciting prospect. Then we find a house priced in their range, and the buyer lives happily ever after. A few years go by, the house appreciates in value, they both get raises, have a baby, sell the house, and move on up to that $850,000 house they wanted a few years earlier. Okay, maybe not the same house, but you get the picture.
This is not an exaggeration. Being realistic and prepared is the key to realizing your dreams of home ownership. You want motor courts and statues in front of your house? Drive through Beverly Hills on your way home from dinner. Done. Fighting the system is what anyone does when they know the truth of what they can and cannot afford. Guessing will cost you in so many ways.
Why put yourself through that? Why put your Realtor through that?
Here's something else to consider: I've had buyers who were convinced they would only qualify for a loan of up to approximately $450,000, but it turned out they were approved for double that! Imagine their surprise and joy. They ended up buying a house under their budget but above their expected maximum for just under $700,000. Even though they didn't go to their max, they were able to buy in an area they first thought they couldn't afford.
So you can see how important this one simple step is in the home-buying process. AND IT COSTS YOU NOTHING TO GET PRE-APPROVED!
No matter how much resistance I get from a buyer today when I ask them to get pre-approved for a home loan before we start looking, I don't budge. And you'll be happy about that when you move into your new home.
Visit Gerry Moylan's real estate website by clicking here
