Ask Ben Belack #1: Top Real Estate Q&A's You Need to Know
Question #1: Do I need to get pre-approval first?
In short, yes for a multitude of reasons. First and foremost, it tells you how much you can spend/what purchasing power you can have. There's nothing worse than going around looking at million-dollar properties, and only finding out later that you can only afford $750,000. It is a change that you can never recover from psychologically.
But more importantly, as a buyer, the second that a seller accepts your offer, all of the contractual leverage shifts to you. So sellers are very picky who they choose, no matter market conditions. So it is incumbent upon you as a buyer to make a seller feel warm and fuzzy on the inside, that you have the financial wherewithal to close. It's very much like dating. So you have to court the seller and one of the most important parts about it above price, above terms is that you can close and that's what pre-approval is.
Question #2: Should I buy now or wait for a recession?
There is so much that life change dictates about buying a home. And the wonderful thing about investing in real estate, aside from all the psychological enjoyment you get from living inside the property, is that it's a great long-term play. I understand everyone's afraid, but if you buy something that when you go into it feels good, you can imagine it feeling good to any subsequent buyers, and you hold it for seven years. You're certainly not going to lose money, so don't ever take yourself out of the market. And right now, interest rates are at historically low levels. So the money that you are renting from the bank is as cheap as it gets, which gives you more purchasing power to stretch up. So don't always be so gross price or purchase price-sensitive, be net sensitive. So I would say, no matter market conditions, never take yourself out of the market. If it feels right, go for it.
Question #3: When will I know it's the right one?
Well, we have clients who build $20M homes custom, and at the end of the day they go oh, we should have put the wine room near the pool. A home is like art; it's a very special thing to you and there is no perfect solution. Our most successful buyer clients are the ones that understand and embrace that it is a process of elimination. If you can get three out of five of your must-haves in priority with let's say the sixth unspoken must-have being price, you've got to engage. Just in case that was a question about your significant other and not about a house--same thing, it's a process of elimination.
Question #4: What is the best time of year to buy?
We have closed deals on New Year's Eve, on Christmas Eve, on everyone's birthday. There is an old saying that we say (at least in Los Angeles) that "deals are made in December", and I do believe that that is true. I think at any time in the market; you will find long days on market on certain listings. And if you're really looking for the best time, that tells me you're looking for a perceived deal, and those usually are available all the time. It's really more about what's been listed for a longer time, versus when's the slower time of year where I can try and strike.
Question #5: Should I spend the money to stage my home for sale?
Yes, 1000%. If you want retail price, that requires retail packaging. We tell sellers "give us $15,000 to stage your house, and we will show you a $100,000 in return." And honestly, we're being conservative. The staging allows us to create emotionally captivating marketing collateral, and that is what compels buyers to come out. More buyers equal more competition, more urgency and more leverage as a seller. So yes, stage anytime you can.
Question #6: What do sellers look for in an offer?
First and foremost the seller is going to think, "is the offer clean and prepared well?" And that comes from your agent. Because in truth, they're not in escrow with you, they're in escrow with your agent. So how the agent prepares your offer is really important. Another part is that you can show the financial wherewithal to close, that comes in two ways. One, proof of funds for the down payment and your closing costs, and two, a pre-approval letter from a lender. We sometimes will throw in a letter and a personal photo of our buyers because just like sellers use staging to tug on the heartstrings of buyers, we will use a letter and a warm-and-fuzzy photo to tug on the heartstrings of a seller. And in a multiple offer situation or a bidding war, it can make the difference.