BP Vance Tips

	BP Vance
	164 East 88th Street New York, New York 10128 Tel. 212.534.4444 Fax 212.534.4469 Email: [email protected] Web: www.bpvance.com/	Tweet

A Sample of BP Vance Real Estate’s Insider Tips for Buying a Home

Buying A Home

• Open a separate bank account—call it your “saving for a home account” Combine this with a piggy bank for the same purpose, and put as much money as you can, from a bit of change to a whole paycheck, into both of these funds.
• When close friends and family members ask what gifts they should get you for birthdays and holidays, if appropriate, ask for a donation to the buy-a-home fund. This may seem tasteless, but you might end up with a gift even greater than expected. If a gift is particularly large, you could even offer to name the backyard, a terrace, or other parts of your home after the gift-giver.
• The better organized are your proofs of assets and liabilities, the better your chances of convincing the bank to give you a loan, and having a lender’s pre-approval letter handy makes the seller more likely to consider your offer. Remember that the most financially qualified buyer will probably be the one to close on the home.

Finding Your Little or No Money Down Home

• Do the necessary budgeting to figure out exactly how much you can comfortably afford to spend on the home purchase. Looking at what you could pay in rent is the best vehicle for determining what you can pay the seller each month in a purchase where you are not putting any money down and are obtaining seller financing. However, owning a home will incur additional costs such as insurance, property taxes, maintenance, and repairs, which must also be considered in your budget.
• As far as furnishing your new home, make sure you at least have enough money for a bed, and most likely, a couch. However, frugal purchasers understand that the entire home does not need to be furnished in one day. America’s third president, Thomas Jefferson, took 40 years to build and rebuild his own home, called Monticello, in Virginia.
• When you visit potential homes, try to get a feel for how desperate the seller is to sell, as desperate sellers may be more willing to accept a little or no money down transaction.

Coming to an Understanding with the Seller

• Once you find the home you would like to purchase and can afford, approach the seller with your offer. Start by explaining why it is a good idea to accept your offer to purchase the home with little or no money down and, if applicable, with the seller also personally financing the transaction.
• You will also need to explain why you are unable to afford the traditional down payment amount and/or to qualify for a traditional loan. Inform the seller that although you are cash/mortgage/credit deficient, you have credible reasons for this and are now a fiscally responsible person.
• Assure the seller that should you fail to make the promised monthly payments, he or she will be able to recover the property and put it back on the market. The seller should know that you would put all terms in writing, including how quickly you would move out of the property if for any reason you could not afford to make the payments.
• You can also promise the seller that as soon as you have enough savings, improved credit, or enough equity in the home, you will attempt to obtain a standard mortgage from a traditional bank.

The Negotiation

• Avoid trying to negotiate a cheaper purchase price for the property. Remember: You are asking the owner to give you the property in return for future payments, and you are attempting to obtain homeownership that you would not otherwise be able to afford. For such benefits, offer to pay at least the asking price—if not more—in order to seal the deal.
• If you are seeking seller financing, you can also expect or even offer to pay an above-average interest rate in exchange for the seller’s loan. However, make sure that you agree to an affordable price and a reasonable payback time period so that the seller does not wind up taking the property back.
• Contact an attorney that has experience representing buyers in little or no money down home purchases as soon as you receive an accepted offer. It is extremely important for you to have your own attorney to make sure that you obtain absolutely clear possession of the land.

 

The Foreclosure Auction

• Arrive at the foreclosure auction extra early in order to get properly set up. Ask and learn a lot; volunteer nothing.
• At a foreclosure auction, the auctioneer will usually require between 5 and 10 percent of the auction price as a down payment upon obtaining the winning bid or even just to register for the auction.
• Take small increments of certified checks or bank funds to the auction for payment. For example, if the property range is around $100,000 and you will need to deposit 10 percent at the auction, bring five $1,000 checks and ten $500 checks.
• Many states have redemption laws that provide a certain amount of time for the original owner to buy the property back at the mortgage price amount plus legal and bank fees. You may want to check on the procedure in your state before pouring hours of your time and energy into a purchase that you may never obtain.
• Bank-owned properties are generally a safer bet than foreclosures. Title is generally clear and there are no redemption laws to worry about. Since the deed is in the bank’s name already, a buyer can be confident that no ghosts or liens will come out from hiding to tie the property up in litigation or affect the prospective buyer’s ability to own the home outright.