Knock Knock....It's Opportunity!!

In our lifetime we may hear many opportunities that knock on our door. But are we ready to answer them? Most take time to analyze properly if we want them to be successful. But we must always be prepared for them as, often, they come with an expiration date. For example, recently I switched brokerages because there was opportunity to become a Sales Manager and Recruiter of Realtors in addition to continuing my lengthy career as one. I couldn't pass this up, as at this stage of my life I wanted to share my knowledge, uncover talent and, in my opinion, make a real difference. I'm so glad I didn't pass it up as I'm even more stoked than ever before. But sometimes we miss seizing the moment for one reason or another. And there are many reasons why home and investment property buyers miss an opportunity to purchase real estate. Some are valid, but others we just end up regretting. Fortunately we can learn from the "Don't Do's" and be prepared to answer the door when opportunity knocks again.

When buying real estate, you don't want to wait to get your finances in order. You want to have that figured out beforehand. So ask yourself, "Will that be Cash or Credit?" If financing, now is the time to get with a mortgage lender to discuss your options. You want to know how much you can afford ahead of time, so you don't spin your wheels looking at properties that are out of your price range. By the same token, you may qualify for more than you think thereby expanding your choices. So talk with a lender first---and not just any lender.

So, how do you choose a lender and what type of loan are you looking for? Is it a conventional, FHA, VA, home equity, commercial or other type of loan? Are you thinking of using a hard money lender that generally has a higher interest rate but a shorter period to pay off the loan? Whatever path you choose, choose wisely as, in any business, there are scammers out there. Having a bad lender can cause the deal to fall through. Not sure who to use? Well instead of Googling it, ask around for recommendations such as from other Home Owners, Investors, Friends, Family Members and of course your Realtor. And if you are financing make sure you get a pre-approval not just a pre-qualification.

Pre-qualification and Pre-Approval may sound similar, but they are not the same. Anyone can get pre-qualified with a simple phone call as it really doesn't require financial documentation. However, getting pre-approved involves actually pulling your credit report and posibly gathering all necessary financial information, tax returns, bank statements, pay stubs and more when you submit an application. If everything checks out, the lender will issue a mortgage commitment with the loan amount that is pre-approved with a period of time it is good for. This is, by far, the better route. If you are financing, you will need a pre-approval letter to purchase the property. Whereas a pre-qualification will only give you and idea of where you stand. When you find the property you truly want, a deal can't wait for you to come up with the funding. So be prepared for the opportunity before you look so you don't miss out. And once you have that pre-approval, avoid major purchases that could put it in jeopardy.

Ok, so you have been pre-approved. Well done. Now resist the temptation to go out and buy that new Mercedes you've been eyeing. Instead watch your expenditures even more. Why? Because your mortgage lender's underwriter is going to re-evaluate your finances and recheck your credit report shortly before closing to see if you still qualify for that loan. So don't buy the boat until after you've closed. And before you get to closing, make sure you have budgeted for closing costs.

You can get an estimate of your closing costs from your lender even prior to making an offer on a property. Granted closing costs vary by location, but typically they are 2% to 7% ( or more depending on your loan type) of the property's purchase price. And while buyers and sellers can negotiate closing costs as part of the deal, the buyer usually bears the larger load with 3% to 4% compared to the seller at 1% to 3%. Remember that this is a generalization and every deal can be different and negotiable. My advice here is to ensure that you have the cash on hand for closing. But we're getting ahead of ourselves a bit, as we still need to pick that property in order to get it to closing.

Picking that property generally starts with an online search. Good place to start, but it always helps to consult a professional about any property. Also look at the forum posts to find out information about various markets you are interested in. For me, It's Pittsburgh PA. A knowledgeable Realtor is a good source to rely upon when buying a home or investment property. You want several properties to search for when looking online so that you have options. And they can set you up on an automated search based upon your criteria. Generally they are looking at properties for you that are on the Multi-List. If you want to search off-market, wholesale, or For Sale By Owner (FSBO) deals you are welcome to do so. With properties that are on the MLS, you will get a seller's disclosure and when represented by a Realtor, you will get access to private notes about the property that are not generally available to the public...not to mention the valuable insight a good Realtor offers--especially valuable when heading to the bargaining table.

Everyone wants a deal, and there is no reason why you should be different. However, bear in mind that the sure fire way of stopping a deal, cold in it's tracks, is making a ridiculously low-ball offer. Typically when you make a reasonable offer, the seller will either accept or at least counter offer. However, when you make a super low-ball offer you run the risk of insulting the seller to the point of them not giving you another chance. And they don't have to. So do your homework and have a professional help you in the negotiation process. Remember it's a business transaction and both parties are looking for something they can mutually agree upon. The ultimate goal is to get the deal!

So your motto should be the same as the Boy Scouts of America.:"Be Prepared". If you are serious about wanting to pursue real estate, always be prepared so you can answer the door when opportunity knocks.