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I’m often asked by my Spring TX first time home buyers “How much under the listing price should we offer?” This is an excellent question. As I had told you at the end of part 3 (the home search) we will run comparatives going back 6 months to see how the home is priced compared to other homes that have sold in the area. If there are quite a few sales we may just look back 3 to 4 months.

I have found that Springl TX sellers price their home differently for different reasons.

1. Ridiculously Overpriced!
Often these sellers have an unrealistic expectation of what their home is worth.  I have found these sellers usually shop real estate agents until they find one that will agree to list at their ridiculous price.  These homes can be 10 to even 30% overpriced. These sellers may need a “dose of reality” for a few months before they begin to realize that their home is way overpriced as compared to others in the area.  If we find a home that is overpriced like this and the listing is new on the market I have found it is sometimes better just to move on.  The longer an overpriced home is for sale, the more likely we can get the seller to face reality and sell at a fair price.

2. A Little Overpriced!
These sellers usually fall into 2 categories:
1. The sellers that feel their home is worth every penny of their asking price.
2. Those that want to leave a little “negotiating” room.
These homes can be 4-10% overpriced. When running comparatives I find many homes that are just a little overpriced.

3. Priced At Fair Market Value These sellers have carefully and realistically studied other homes for sale. They have priced their homes very competitively. These homes usually sell within 4 weeks at or very near the listed price.  In the market we are experiencing in Spring, with Exxon coming in, these are selling like hot cakes).

4. Priced Below Fair Market Value
These homes are priced below value. Perhaps the seller wants a fast sale. Perhaps the real estate agent recommended too low of a price. These homes usually sell within 7-10 days, at or above the listed price. There are usually competing offers.  Often these are foreclosures and short sales and there will be numerous offers.

At this point we will want to discuss how the Spring TX home is priced and decide what we want to offer.  You want to be careful in this step that you don’t make such a low ball offer that you offend the seller.  If the home is ridiculously overpriced then yes the seller may get offended but so be it.  If the home is priced fairly you don’t want to come in so low to offend the seller.  Most sellers have left some room to negotiate and so it is okay to be a little aggressive but not so aggressive that it is offensive.  I remember a listing I had where a low ball offer came in and they also asked for my clients’ stainless steel grill and a bed.  That was years ago when stainless steel grills were still VERY EXPENSIVE.  During the negotiating another offer came in and he jumped at the other offer as these people had totally offended him.  My seller was very attached to that grill (it was a standalone grill and was not attached to the house). Asking for the grill was way over the top as far as he was concerned.

Bank Protection
Even by carefully studying homes for sale, it’s sometimes difficult to establish Fair Market Value. If you’re obtaining a new home loan, you’ll be protected by the Professional Bank Appraisal. Home lenders want to make sure that you don’t over-pay for a home. If the home does not meet value in the eyes of the bank appraiser, you’ll be informed. At that time, we can re-negotiate the sale price or void the agreement and refund your earnest money deposit.

My job is to ensure that as a Spring TX first time home buyer you have the tools and information you need to make an informed decision. I will help you prepare the offer. Then I will present it to the seller on your behalf and try my best to get it accepted at your price and terms!  My next post will be on the terms beside price that we will be negotiating.

For all your Spring/Tomball/Magnolia/The Woodlands needs, contact me today! Marchel Peterson Results Realty Cell: 832-721-8332

Now that you are pre-approved and have decided on the area you want to live in it is time to start searching for your Spring TX home.  You have the list of homes you identified from your web search.  I don’t recommend looking at more than 5 to 6 Spring TX homes at a time.  I have found if you look at more than that it becomes difficult to remember what you have seen.  You are going to want to bring a notebook or iPad along so you can take notes as we go.  If you can tell that a home is not going to work then it is best just to move on to the next home.

My real estate mentor years ago gave me some wise advice.  She told me to never sell a house that I couldn’t resale.  I have taken her instructions to heart and as we go through the Spring TX homes I will be looking for anything that would make this home hard to re-sale down the road.  There are many things that can make a home hard to re-sale.  Some of the dings that come to mind are homes that back up to roads, apartment complexes power lines etc., all bedrooms upstairs, a very small yard or a choppy floor plan.

Years ago we moved here from the north and bought a home with the master upstairs as that is what everyone had up north. As a real estate broker I have learned that most buyers in Spring TX prefer either a one story or the master bedroom downstairs.  Many people use the filter of master bedroom down or one story when they search the MLS. There are people that want all bedrooms up such as those with young children or a day sleeper. Just remember if you buy a home with all bedrooms up it might take a little longer to re-sale.  On the plus side you probably got a good deal when you bought the home. You need to remember that you will also probably have to sell for less when you go to sale your home.

Once you have narrowed down the homes that you are interested in we will want to compare these homes to other homes that have sold in that area in the last 6 months.  What a home is worth is what other homes in the neighborhood have sold for. Sometimes this will tell you that the home is priced good and other times it might tell you that the home seems to be over priced for the area.  Recently I did comparatives for a client and we found that the home was fairly overpriced; in doing the comparatives we found another home that was priced good with similar square footage. In this case that put the comparative home on my clients radar and they ended up buying the comparative.  Doing a buyer’s comparative analysis will give you the information you need to make an educated offer.  My next post will cover what price to offer for your Spring Texas home.’

• Spring TX first time home buyers guide – Loan Pre-approval – Part 1
• Spring TX first time home buyers guide – starting the home search! – Part 2
• Spring TX First Time Home Buyers Guide – The Home Search! Part 3

For all your Spring/Tomball/Magnolia/The Woodlands needs, contact me today! Marchel Peterson Results Realty Cell: 832-721-8332

Now that you are pre-approved for your Spring TX home loan the next step for a Spring TX first time home buyer is to start looking for your home. I have found that most buyers like to start looking at homes and familiarizing themselves with the areas online.  It is a bit of a challenge in Spring TX as there’s not actually a town of Spring TX.  Spring is an unincorporated area in northwest Harris and southeast Montgomery County covering a wide area; including three different school districts Spring ISD, Klein ISD and Conroe ISD.

There are lots of websites that you can go to search for homes for sale but we are blessed in the Houston area to have an INCREDIBLE Public MLS site through the Houston Association of REALTORS® (HAR).  We tend to take this site for granted but as I have blogged and met people across the United States I have realized how fortunate we are to have such an incredible public site.  HAR has won many awards for this site and they are constantly improving it. You may search directly at www.HAR.com or if you are working with me to find your new Spring TX home you can click here to go in to the site.  By going in under my name any questions that you have will be immediately directed to me.

In this busy age that we live in I have found SpringTX first time home buyers often want to be set up to have new listings sent to them automatically. It doesn’t matter whether you are looking for a single family detached Spring TX home, a home on acreage, a town-home or even vacant land; this automated search can do the work for you. You will learn about listings new to the market even before most REALTORS®.  You are notified of new listings within 24 hours of them going on the market.  The listings for the most part have directions so you can also explore subdivisions to get an idea of where you want to be.  Please click here for the automated form.  I have tried to make this as specific as I can.    I am able to put filters on your search and have learned all kinds of tricks to tweak your Spring Texas home search so we only pull up the specific type of home you are looking for.

* * * Please note: If you are already looking at homes or land with another REALTOR® and have signed a Buyers Representation Agreement with that REALTOR® please do not use this automated search. It would be a violation of the Code of Ethics for the National Association of REALTOR® for me to be assisting you in this circumstance. * * * If you have an agent and this is not set up for you just ask your REALTOR® to set it up.

You are probably wondering why I put the First time home buyer Spring TX website search as number 2 in my series and not number 1. I have found with today’s ever changing mortgage environment that it is more important than ever to get pre-approved for your loan ahead of time; especially if you are a first time home buyer and are not familiar with the process.  If you wait until you are ready  to buy and you find some kind of a hiccup that needs to be worked on then it is too late and could cause you to have to wait longer to buy your first home.  By getting pre-approved (as much as 6 months prior to buying your home) it gives you time to take corrective action.  I also can’t tell you how many first time home buyers I have worked with who were not searching in the correct price range and that can be very discouraging.  Not to mention that by starting early you can start narrowing areas and decide what you want in a home.

In this ”Spring TX first time home buyer series” I hope to alleviate some of the first time home buying mystery. I have noticed when people start thinking about buying a home the first thing they will do in this technological age is to start looking at homes online.  If that is what you are doing “STOP”; the VERY FIRST step in the process should be to talk with a good lender. It is discouraging to have started looking at homes online and then find out you don’t qualify for the homes that you are looking at.  Even if you are 6 months to a year away it is a good idea to at least talk to a lender to make sure you are on the right path.  If you are serious then go ahead and get yourself pre-approved.  That way you will only be looking at homes that are in your price range.

When I say pre-approved I’m not talking pre-qualified; I’m talking pre-approved. There is a difference between the two.  In the days where anyone could get a loan this was not a big deal but those days are over.  With all the new lending rules it  is not uncommon for people who have excellent credit to have to jump over hoops to get a home loan.  

What is a Pre-Qualification?

A prequalification is simply a meeting between a loan officer and a customer to determine what the mortgage needs of the customer are.  Income and assets are not verified.  The credit report may or may not be pulled.  The information is not submitted to an underwriter.  The lender does not receive enough information to make a credit decision.

What is a Pre-Approval?

Pre-approval includes a complete loan application.  A credit report is pulled and asset and income are verified.  The information is submitted to underwriters for “credit only” decision.  Once you have been pre-approved your credit package can be used with any property.  Final loan approval will be subject to the underwriter approving the property only.  A pre-approval is normally good for 90 days.  The borrower receives a written pre-approval letter.  A true approval requires this income and asset documentation and credit reports are required on all loan types.

Being pre-approved in Spring TX gives you an edge when you start looking for your home.  If you get in to the situation where there is more than one offer on a home it is often the person who is further along in the loan process who will get the home.  I have even had the situation where the other offer was a little more but my seller preferred the person who had a true pre-approval.

The rules have TOTALLY changed in the mortgage industry.  The products that lenders had for first time home buyers in Spring TX last year, maybe even last week are no longer available to the consumer which makes getting pre-approved for your loan more important than ever.  Once you even think that you might be interested in purchasing a home you should call a lender. Even if the news is not good by going through the process you will know what you need to start working on and you can make a game plan to get your credit in order.

The days of a real estate transaction being dependent upon the creativity of a loose lender are finished.  Down payments are back again and FHA loans are sometimes the only game in town with VA loans being about the only 100% loan. With all of this in mind getting yourself pre-approved before you ever start looking is more important than ever.

I am also attaching some Do’s and Don’ts you might consider putting in to action when you start thinking about purchasing a Spring TX home.

Do’s

• Do make all your payments on time. Your credit will be checked again right before you close.
• Do continue saving money. There are always additional expenses once you move and you will be glad for that savings.
• Do make deposits into your bank account on a regular basis. If you have any unusual deposits for large sums of money document them as the lender may need to verify the source.

Don’ts

• Do not co-sign for any loans for friends or family. That debt would be held against you.
• Do not decide this is the time to change banks; you can do that after you move in.
• Do not open ANY new accounts. Even though the new account has a $0 balance it may still affect your debt to income ratio.
• Do not buy a new car or new furniture!!! Wait until after you are in your new house then go shopping otherwise the debt could affect your debt to income ratio.
• Do not lender shop over the Internet. Each lender pulls a credit score and multiple hits on your credit report can cause your score to drop dramatically.
• Do not pull your own score and then decide you will check why accounts are still open or have balances. I did this myself and then had to write a note at closing to explain why I had all these hits on my credit

• Spring TX first time home buyers guide – Loan Pre-approval – Part 1
• Spring TX first time home buyers guide – starting the home search! – Part 2
• Spring TX First Time Home Buyers Guide – The Home Search! Part 3

For all your Spring/Tomball/Magnolia/The Woodlands needs, contact me today! Marchel Peterson Results Realty Cell: 832-721-8332