3 Questions to Ask If You Want to Buy Your Dream Home

If you are debating purchasing a home right now, you are probably getting a lot of advice. Though your friends and family will have your best interest at heart, they may not be fully aware of your needs and what is currently happening in the real estate market.

Ask yourself the following 3 questions to help determine if now is a good time for you to buy in today’s market.

1. Why am I buying a home in the first place? 

This is truly the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with money.

For example, a survey by Braun showed that over 75% of parents say “their child’s education is an important part of the search for a new home.”

This survey supports a study by the Joint Center for Housing Studies at Harvard University which revealed that the top four reasons Americans buy a home have nothing to do with money. They are:

  • A good place to raise children and for them to get a good education
  • A place where you and your family feel safe
  • More space for you and your family
  • Control of that space

What does owning a home mean to you? What non-financial benefits will you and your family gain from owning a home? The answer to that question should be the biggest reason you decide to purchase or not.

2. Where are home values headed?

According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), the median price of homes sold in December (the latest data available) was $232,200, up 4.0% from last year. This increase also marks the 58th consecutive month with year-over-year gains.

If we look at the numbers year over year, CoreLogic forecasted a rise by 4.7% from December 2016 to December 2017.

What does that mean to you?

Simply put, with prices increasing each month, it might cost you more if you wait until next year to buy. Your down payment will also need to be higher in order to account for the higher price of the home you wish to buy.

3. Where are mortgage interest rates headed?

A buyer must be concerned about more than just prices. The ‘long-term cost’ of a home can be dramatically impacted by even a small increase in mortgage rates.

The Mortgage Bankers Association (MBA), the National Association of Realtors, and Fannie Mae have all projected that mortgage interest rates will increase over the next twelve months, as you can see in the chart below:

Bottom Line

Only you and your family will know for certain if now is the right time to purchase a home. Answering these questions will help you make that decision.

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Jon Mahoney

Director, Luxury Homes Division

Professional Financial Planner

Keller Williams, Santa Barbara

(805) 689-0532

BRE# 01269717

info@JonMahoney.com

www.JonMahoney.com

Open Floor Plan Still Popular

Open floor plans continue to reign. Eighty-four percent of builders say that in the typical single-family home they build, the kitchen and family room arrangement is at least partially open. Fifty-four percent say it’s completely open, according to responses from a September 2016 National Association of Home Builders/Wells Fargo Housing Market Index.

“Completely open” essentially means the two areas are combined into the same room. Partially open signifies areas separated by a partial wall, arch, counter, or something less than a full wall.

Seventy percent of recent and prospective home buyers say they prefer a home with either a completely or partially open kitchen-family room arrangement; 32 percent say they prefer the arrangement completely open, according to an NAHB survey.

Only 16 percent of buyers say they want the kitchen and family rooms in separate areas of the house.

As demand continues to increase for open floor plans, homeowners of existing-homes are also looking to open up their kitchen and family room areas. Professional remodelers report that 40 percent of their projects involved making the floor plan more open by removing interior walls, pillars, arches, etc., according to first quarter of 2016 data in the Remodeling Market Index.

Source: “Builders Satisfy Demand for Open Floor Plans,” National Association of Home Builders’ Eye on Housing blog (Jan. 11, 2017)

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Jon Mahoney

Director, Luxury Homes Division

Professional Financial Planner

Keller Williams, Santa Barbara

(805) 689-0532

BRE# 01269717

info@JonMahoney.com

www.JonMahoney.com

How to Avoid House-Hunting Drama

Horror stories often abound when house hunting enters the conversation. Whatever you’ve heard, it’s natural to feel a little apprehensive when making what could be one of the biggest purchases in your life.

Moving is one of the most stressful situations that a person can go through. It’s one of the most rewarding, but also one of the most stressful. So if you’re in the market for a house, follow these tips to drop the drama at the door during your search for a home.

Know What You Want

The first step to avoid house hunting drama is to really sit back and think about what is most important to you. What are your non-negotiables? Location? Educational opportunities? Price? Daily commute? Once you have determined what is important to you and your family, then begin your home search.

Stick to Criteria

Be sure to check that the communities in which you are conducting your search include homes that align with your values. This will narrow down your scope so you are not looking at hundreds of homes, just the ones that fit in your criteria. If you do your research ahead of time, you can be more confident that what you want is available in the area that you want. Looking in an area that’s not going to provide the home type that you want is going to cause frustration.

Get Preapproved

The search for the right home can take long enough, let alone with extra interruptions. Avoid paperwork hiccups by submitting all of the necessary documents to make sure your loan is completely preapproved. So if there is any issue, it is identified early on in the process and not the moment that you’re trying to submit a contract on the property.

Remember that you don’t make your monthly payment to the price of the home. Price is relative to the mortgage you are able to obtain. So be sure to get your numbers locked down so you know what price range you are most comfortable with.

Choose the Right Person

When choosing a real estate agent, do your research. Meet with them to make sure you are a fit. Give them your expectations and make sure they have the ability to get the job done.

Hiring the right home inspector could also ensure a smoother home buying process.

It’s all in the reports that they provide. The ideal reports by inspectors include detailed explanations as well as photographs. Unfortunately, some reports consist of a two- to three-page checklist. This can create frustration on the buyers and the sellers part because you don’t have clear enough documentation on what the problem is.

Communication is Key

Communication is the antidote for any drama disease. The more open the client is with the agent, the less drama is going to present itself in the transaction. You have to trust your agent and relate to them as a confidant, as an ally.

Be open about your biggest stressors and fears in the home buying process with your real estate agent. If you are prone to anxiety and stress, don’t be embarrassed by that, but bring that to your agent.

Know Your Personality

Let’s face it. Most of us have at least one drama queen in our lives. And some of us might just be one. Be true to yourself. If you know that you’re a drama-filled person, then embrace that. A good real estate agent will have experience in working with all different kinds of people and family dynamics. If that’s your personality type, make your agent aware.

Don’t Wait

Procrastination causes drama. If you have a deadline, many real estate professionals recommend beginning four to six months ahead of time to start educating yourself on the process. Do some research on your local housing market. For example, find out the average amount that is negotiated in your community. Have the right expectations, or else you’re setting yourself up for frustration. A little preparation will go a long way in helping your assumptions stay reasonably accurate.

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Jon Mahoney

Director, Luxury Homes Division

Professional Financial Planner

Keller Williams, Santa Barbara

(805) 689-0532

BRE# 01269717

info@JonMahoney.com

www.JonMahoney.com

The Fed Raised Rates: What Does that Mean for Housing?

You may have heard that the Federal Reserve raised rates last week… But what does that mean if you are looking to buy a home in the near future?

Many in the housing industry have predicted that the Federal Open Market Committee (FOMC), the policy-making arm of the Federal Reserve, would vote to raise the federal fund’s target rate at their December meeting. For only the second time in a decade, this is exactly what happened.

There were many factors that contributed to the 0.25 point increase (from 0.50 to 0.75), but many are pointing to the latest jobs report and low unemployment rate (4.6%) as the main reason.

Homebuyers shouldn’t be particularly concerned with last week’s Fed move. Even with rates hovering over 4 percent, they’re still historically low. Most market observers are expecting a gradual rise in home loan rates in the near term, anticipating mortgage rates to stay under 5 percent through 2017.

Bottom Line

Only time will tell what the long-term impact of the rate hike will be, but in the short term, there should be no reason for alarm.

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Jon Mahoney

Director, Luxury Homes Division

Professional Financial Planner

Keller Williams, Santa Barbara

(805) 689-0532

BRE# 01269717

info@JonMahoney.com

www.JonMahoney.com

4 Reasons to Buy Your Dream Home This Winter

As the temperature in many areas of the country starts to cool down, you might think that the housing market will do the same. This couldn’t be further from the truth! Here are 4 reasons you should consider buying your dream home this winter instead of waiting for spring!

1. Prices Will Continue to Rise

CoreLogic’s latest Home Price Index reports that home prices have appreciated by 6.3% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.2% over the next year.

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates are Projected to Increase

Your monthly housing cost is as much related to the price you pay for your home as it is to the mortgage interest rate you secure.

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage are currently at 4.08%. The Mortgage Bankers Association, Fannie Mae, Freddie Mac & the National Association of Realtors are in unison, projecting that rates will increase by this time next year.

An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.

3. Either Way You’re Paying a Mortgage

There are some renters who have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent free, you are paying a mortgage – either yours or your landlord’s.

As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity.

Are you ready to put your housing cost to work for you?

4. It’s Time to Move on with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe now is the time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

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Jon Mahoney

Director, Luxury Homes Division

Professional Financial Planner

Keller Williams, Santa Barbara

(805) 689-0532

BRE# 01269717

info@JonMahoney.com

www.JonMahoney.com

Ready to Make an Offer? 4 Tips for Success

making-offer

So you’ve been searching for that perfect house to call a ‘home’ and you finally found one! The price is right, and in such a competitive market you want to make sure you make a good offer so that you can guarantee your dream of making this house yours comes true!

Here are the 4 Tips they covered along with some additional information for your consideration:

1. Understand How Much You Can Afford

While it’s not nearly as fun as house hunting, fully understanding your finances is critical in making an offer.

This ‘tip’ or ‘step’ really should take place before you start your home search process.

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and will allow you to make your offer with the confidence of knowing that you have already been approved for a mortgage for that amount. You will also need to know if you are prepared to make any repairs that may need to be made to the house (ex: new roof, new furnace).

2. Act Fast

Even though there are fewer investors, the inventory of homes for sale is also low and competition for housing continues to heat up in many parts of the country.

According to the latest Existing Home Sales Report, the inventory of homes for sale is currently at a 4.7-month supply. This is well below the 6-month supply that is needed for a ‘normal’ market. Buyer demand has continued to outpace the supply of homes for sale, causing buyers to compete with each other for their dream home.

Make sure that as soon as you decide that you want to make an offer, you work with your agent to present it as soon as possible.

3. Make a Solid Offer

Freddie Mac offers this advice to help make your offer the strongest it can be:

“Your strongest offer will be comparable with other sales and listings in the neighborhood. A licensed real estate agent active in the neighborhoods you are considering will be instrumental in helping you put in a solid offer based on their experience and other key considerations such as recent sales of similar homes, the condition of the house and what you can afford.” 

Consider ways of making your offer stand out! Many buyers write a personal letter to the seller letting them know how much they would love to be the new homeowners. Your agent will be able to help you figure out if there are any other ways your offer could stand above the rest.

4. Be Prepared to Negotiate

It’s likely that you’ll get at least one counteroffer from the sellers so be prepared. The two things most likely to be negotiated are the selling price and closing date. Given that, you’ll be glad you did your homework first to understand how much you can afford.

Your agent will also be key in the negotiation process, giving you guidance on the counteroffer and making sure that the agreed-to contract terms are met.

If your offer is approved, Freddie Mac urges you to “always get an independent home inspection, so you know the true condition of the home. If the inspection uncovers undisclosed problems or issues, you can typically re-negotiate the terms or cancel the contract.”

Bottom Line

Whether buying your first home or your fifth, having a local real estate professional who is an expert in their market on your side is your best bet to make sure the process goes smoothly.

 

Happy House Hunting!

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Jon Mahoney

Director, Luxury Homes Division

Professional Financial Planner

Keller Williams, Santa Barbara

(805) 689-0532

BRE# 01269717

info@JonMahoney.com

www.JonMahoney.com

6 Home Improvement Flubs That Cause Inspection Headaches

jul16_HD_inspections

Do-it-yourself household projects have become increasingly popular, but home inspectors are finding a host of safety problems caused by overconfident home owners seeking shortcuts. Home owners now see these DIY TV shows, which make these household remodeling projects look easy. They can go to a big box store and easily get the materials too. They think: ‘How hard can it be?’” But home safety is a top priority for home inspectors. They look for loose carpeting, uneven steps, and water temperature extremes, among other common risk factors. Here are additional concerns noted by home inspectors:

Wobbly decks

Look for: insecurely attached railings and wobbling or improperly sized posts.

Decks shouldn’t move. Wood decks can collapse if they’re not properly attached to the house or if they rely on the house too much for support. Fasteners can corrode, which could result in failure of the deck. Many times owners are unaware all these problems exist.

Incorrectly removed walls

Look for: sagging roofs and ceilings.

Open floor plans are appealing, but not when they overlook structural issues, which can happen when home owners fail to identify load-bearing walls. Pay attention to the age of a home. In newer construction, homes tend to have greater side support, which can accommodate open floor plans. Older homes relied more on the center for stability, which can mean trouble for amateur wall-busters.

DIY plumbing

Look for: wrong pipes used for connections.

A common error home inspectors see in plumbing jobs comes from home owners who purchase a sink and cabinet from a big-box store and handle the installation themselves. Using the wrong pipes often results in costly water damage. Home inspectors commonly see flexible, accordion-shaped pipe under the sink for the drain, even though they do not comply with residential plumbing codes. Pipes should be smooth and unridged to prevent clogs or waste buildup.

Missing garage door sensors

Look for: sensors missing or not facing one another.

Garage doors can pose a big safety threat if improperly installed. The safety sensors must be connected and aligned correctly for the garage door to go down, and if it doesn’t, the owner may just uninstall them. Additionally, a poor connection could be the culprit of the sensor malfunction. Home inspectors often see the safety cable being threaded incorrectly, which could cause it to break and send the garage door door crashing down.

Disarmed alarms

Look for: missing batteries or disconnected alarms.

Home inspectors aren’t always required to test smoke and carbon monoxide detectors, but many do. Municipalities often suggest installing them within 15 feet of the primary entrance to each sleeping room. Home owners often remove them if they start chirping or disconnect them to prevent false alarms as they cook. Many times home inspectors find the battery is gone. And that is a big safety concern.

Faulty electrical

Watch for: exposed wiring and overloaded circuits.

Electrical problems often emerge when an addition has been made to a home, such as a basement or attic remodel. Home owners may add two wires to one circuit breaker where there should be only one. Or some  amateurs use a wire that’s too small in the breaker, which could pose a fire hazard.

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Jon Mahoney

Director, Luxury Homes Division

Professional Financial Planner

Keller Williams, Santa Barbara

(805) 689-0532

BRE# 01269717

info@JonMahoney.com

www.JonMahoney.com

6 Essential Steps to Buying the Right New Home

santa-barbara-infinity-pool

Is it time to buy a new home? Maybe your growing family doesn’t quite fit in your current place – the kids are getting bigger, or there are more of them and they need more room to run around. Maybe you’re in the opposite situation — an empty nester, ready to downsize. Or maybe you’re moving because of your work, or you’re ready for the bit of adventure that can come with heading to a new town.

Whatever the reason, there are a few steps that will make the process easier and help you land the right place for your needs.

1. Check your credit rating

Unless you happen to have a giant pile of money lying around, you’re going to need a mortgage. And one of the first things any lender is going to do is check your credit rating. Lending standards have risen since the go-go days of the early 2000s, so a good score is more important than ever. Higher scores generally mean you are a lower credit risk and should help you qualify for a lower interest rate, meaning less of your money goes to the bank and more to your house.

The highest score is 800. While you don’t need to be perfect — which is extremely rare — a higher score will make getting a mortgage much easier. In a 2013 study, the FDIC found that almost no mortgages were issued to people with a score below 620, so consider that an absolute minimum.

Under federal law, everyone is entitled to a free credit report once per year. This report provides a detailed record of how you’ve managed your credit over time. Click here to start the process for getting yours. If your credit rating is poor, start burnishing it immediately — before you go house hunting.

2. Find a lender and get approved

So, your credit score is in order, now it’s time to head to the bank, or at least a lender. The market is hot now in many parts of the country, and many sellers won’t even talk to a potential buyer who isn’t pre-approved.

Sometimes it can make sense to apply for your loan with the same bank where you have your day-to-day accounts, but an independent mortgage broker can also help you find a good deal by comparing the rates and terms of many lenders. While the interest rate is the biggest single item you’ll be looking at, there are likely to be a host of other fees to watch out for. Once you get that pre-approval, you’ll know how much you can spend.

3. Figure out what you need

Note, you are not ready to start scrolling through the thousands of listing on the Internet, but you soon will be. First, though, get your priorities in order. Make a list of what you really need and what you just really want. Here are some key items to help you get started:

  • Is it important that the public schools are good, or will you send your children to private school or home school them? Keep in mind that even if you won’t be sending kids to the local schools, being near good ones will help when you eventually sell the place.
  • How close do you need to be to a doctor or pharmacy?
  • What does the commute look like from the property? (Don’t forget that commuting costs are a part of living costs. If you buy a cheaper house because it’s farther away, you may end up losing that savings in the extra driving costs.
  • Do you want to be able to walk places? What amenities are within walking distance?
  • What are your personal needs and wants? Don’t be afraid to get into real nitty-gritty details.  If you entertain, maybe a spacious dining room or open-plan kitchen are important. Or maybe you want a southern exposure for your garden.
  • Once you have your list, put it in order of priority. Get used to the idea that some of the things on the bottom of the list may need to be sacrificed. No matter how much you have to spend, you’ll always want a little bit more house than you can afford.

4. Start house shopping, boots on the ground

Flipping through house listings on the Internet is an obvious place to start, but don’t let that be all you do. Especially if you’re new to a town, there’s no substitute for actually being in a place and getting a feeling for it. Breathing the air and walking the streets in different neighborhoods can help you understand why two houses a few blocks away have radically different prices.

Find a good real estate agent and listen to the suggestions they offer based on your wish list. Go to open houses. Lots of them. It can be fun to visit houses outside your price range to give you some perspective (and to see how the other half lives), but spend most of your time looking at houses that are within your range.

After some looking, you may find you need to revisit the priorities you developed in step three. That’s OK. It will be tempting to stretch a little further and buy something just a tiny bit more expensive. Resist this. Don’t buy more than you can afford. And sometimes the things you’re missing may just call for some delayed gratification. If you can’t afford a house with a hot tub, you can always put the spa on your list for later improvements.

5. Make an offer

This part can be tricky. If you’ve looked at enough houses, you’ve probably got a good picture of your particular market and whether a house is correctly priced. Your agent should be able to offer you advice about this and about what sort of offer to make. They’ll also have information about how long the house has been on the market and may have a feeling for how motivated the seller is.

It’s important to listen to your agent, but remember, you’re the one who’s going to have to live there and make payments for the next few decades. It’s your call in the end. Some markets are very tight, and you might get into a bidding war. Don’t let the thrill of winning the war push you over your budget. And whatever you do, make the offer contingent on an inspection. Read on.

6. Get an inspection

Unless you’re a contractor, you probably aren’t trained to look at the house in the same way an inspector is. That odd bulge in the floor could be nothing, or it could mean problems that will end up costing you tens of thousands of dollars to fix. The inspector (your agent will know at least one) will go over the house and hopefully spot all the little defects you missed.

At this point, you may be emotionally invested in the place, but keep your logical side engaged. Be willing to back out if there are too many red flags. It’s tough to pull back when you’re this close to the end, but it’s important to be open to it. And, if you have to make that call, at least you won’t have to start over from step one.

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Jon Mahoney

Director, Luxury Homes Division

Professional Financial Planner

Keller Williams, Santa Barbara

(805) 689-0532

BRE# 01269717

info@JonMahoney.com

www.JonMahoney.com

9 Questions to Ask Before You Buy a Fixer-Upper

questions-to-ask-before-you-buy-a-fixer-upper-santa-barbara

So the new house isn’t perfect—it needs a little fixing up. A house that needs some TLC might seem like a bargain, especially if it’s your first home, but are you the right person to strap on the tool belt and give that house an overhaul? It takes a certain mindset—and budget—to see this type of project through. How can you tell if you’ve got a diamond in the rough worth excavating? Well, first you have to closely examine both the house and yourself. Here are some questions you need to consider when you’re thinking of buying a fixer-upper.

Making the Decision
Thinking of buying a fixer-upper? Sure, buying a home that needs renovation can be a great idea, but be prepared for a time-consuming commitment. Before you take the plunge, ask yourself whether you’re ready to take on the daunting task. Be prepared to spend your weekends sanding and staining, and your weeknights priming and painting!

Is the House Ugly?

What kinds of problems does your house have? If they’re cosmetic—those little details that make a house prettier, like painting or replacing the bathroom sink—that’s one thing. Look for houses with tiny glitches, things that won’t cost a lot of money and won’t require a lot of contractors.

Does the House Have Structural Damage?
If the problems, however, are structural, you might want to pass, especially if you’re new to home repair. Structural problems like foundation troubles, termites, and plumbing are typically discovered during a home inspection. Fixing these will be expensive and time-consuming—so think hard before you close on a house that’s not structurally sound.

Do You Have the Time?

If you’re the kind of person who wants to go to the gym after work and likes to have weekends free to go to the movies, then face it: You’re not a candidate for a fixer-upper. Fixer-uppers are time drains, and they disrupt your life.

Where Will You Live?

If you have an alternate place to stay while the work is being done, renovations on a new home may not be such a big issue. Of course, if you’re a DIY diehard and love the process of turning one thing into another, then the disruption might not bother you as much as it might someone who likes things neat and clean and finished.

Can You Hire the Right Pro?

If you’re hiring a contractor, you’ll need time to do some research before asking for bids. Get at least three estimates for any work you’ll need done, ask for references, and if possible visit examples of their work. Ask your realtor or your neighbors who they used and what they thought of the work.

Is It in the Budget?

If you’re pooling every last penny for that down payment, you won’t have much left over for home renovations, so you might be better off buying a house that’s livable as is. Even if you do have money set aside for renovations, make sure to add another 20 percent on top of any estimates you get. There will always be extra expenses, no matter how carefully you plan.

Will It Test Your Relationship?

Buying a house is stressful. Throw in a renovation on top of that, and the strain can be too much for some couples. A lot of new couples move into fixer-uppers. That can be tough on a relationship if you’re trying to figure out these difficult things that have big implications for your finances and how you want to spend your life.

Do You Have a Support Team?

If you’re single and still want to fix up an older home, make sure you have a network of helpers and never do the work alone. But count on folks with expertise. Nothing could start a family feud faster than getting free help and someone accidentally breaks something or does something wrong.

Are Your Expectations Realistic?

If you watch home renovation shows, don’t think that your experience will be like those dramatic and quick transformations. Remember, that’s not really reality TV, and you might end up a disaster episode. But if you plan ahead with your time, money, and resources, your hard work could really pay off.

 

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Jon Mahoney

Director, Luxury Homes Division

Professional Financial Planner

Keller Williams, Santa Barbara

(805) 689-0532

BRE# 01269717

info@JonMahoney.com

Creative ways to win a bidding war

Santa-Barbara-Real-Estate-For-Sale

If you’re a home shopper in a market like Santa Barbara where bidding wars are common, it helps to have a strategy to ensure that your bid stands out from the competition.

You’ll want to do the basics: Make sure you have your financing in place, turning in all your loan paperwork before placing an offer. Better yet, if you have the means, you’ll really catch a buyer’s attention if you make an all-cash offer.

Also, write a financially competitive offer with as few contingencies as you’re comfortable with. Some buyers are waiving financing contingencies or even home-inspection contingencies, if they’re the handy type—though many buyers would be smart to keep that home-inspection clause.

And be flexible with your move-in date. Working with a seller who needs to move right away? Be prepared to close quickly so they can be on their way sooner. Does the seller need a month or two—or six—to move out? If you can be flexible and allow them to stay in their home for a while after closing (paying you rent, of course), they may choose your offer over all the rest.

But in some markets, you may have to be more creative than that to win the home you covet. If possible, find out the seller’s needs and wants, so you can customize your offer.

Below are some of the more unusual ways buyers can get the upper hand.

Write a love letter

It’s not all about the money. In situations where you are selling your home, there’s an emotional component. Sellers often like to feel good about the people who will eventually live in their home.

That’s why it’s often an effective strategy to attach a letter along with your offer, and maybe even a photo of your family, explaining why you want to live there.

Increase the earnest money

Another way to show the seller you’re serious: Up the amount of earnest money you’re willing to deposit.

Earnest money is a good-faith deposit made by the buyers after the offer is accepted. (You get it back in time for closing, and it usually makes up a chunk of a buyer’s down payment.) And while it’s often between 1% and 3% of the purchase price, boosting it even higher—maybe even up to 20%—will make an impression.

That will really make your offer different than someone else’s, especially if you have a seller with a past of prospective buyers who had been wishy-washy.

Cover seller costs

Sellers often cover transfer taxes associated with the sale, and many times will pay for a home warranty. To sweeten a deal, some buyers offer to pay these costs for them.

They don’t stop there, either. Many sellers will hire professional stagers to help them spruce up the home so it’s appealing to buyers—and some buyers are reimbursing them for that expense. Others are offering to pay for the seller’s moving costs.

Take the furniture

Sometimes, sellers have furnishings that they don’t want to take with them to their next home. As a buyer, you can help by agreeing to deal with the items they no longer want.

Make your offer as is

Some people offer to buy the home “as is” in their offer. They still do a home inspection—and have a contingency that allows them to get out of the deal if there is something drastically wrong with the property—but agree that they’re not going to be asking for repairs found during the inspection. By taking this route, the sellers know they won’t have additional costs to fix up the home before closing.

It allows you to walk away if something major comes up. But unless it is something crazy, you won’t be able to renegotiate.

Make multiple offers

Buyers who find more than one home they’re interested in may consider submitting offers on more than one home. Check local rules and customs on this, but, in general the deal is not consummated until the contract is signed and earnest money delivered. So you’ll likely be free to bid on as many places as you want.

In areas like Santa Barbara where inventory is limited, some buyers will put in two or three contracts on homes that they like because they’re not sure which one will work out.

But that strategy can just serve to complicate the process. It’s best to concentrate on one. If there’s another home that’s in the running, have an offer ready to submit in case the first one doesn’t get accepted.

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Jon Mahoney

Director, Luxury Homes Division

Professional Financial Planner

Keller Williams, Santa Barbara

(805) 689-0532

BRE# 01269717

info@JonMahoney.com