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Smart Moves

How Buyers Can Make the Best Deal

September 14, 1997|ELLEN JAMES MARTIN | SPECIAL TO THE TIMES

They were a family of three--including a 13-year-old who was a talented drum majorette--and they were moving to Southern California from the Chicago area. Not only did they want a good price on the property they were buying, they also wanted to be sure they bought in a community with a superior high school marching band.

So instead of rushing into a purchase, they sold their old home, put their furniture into storage and moved into a residential hotel for more than a month until they found the place they wanted. In their case, the buying process included interviews with the band leaders of three high schools.

Accepting a double move put the family in a catbird seat for a favorable purchase: They could then take their time to satisfy their teenager's quest to be part of an active band that participated in out-of-town competitions and they gave themselves the flexibility to negotiate the price of the home they bought.

"A decision on where you live should always be made very, very carefully," said Fran Barrington of the Coldwell Banker San Marino office, who represented the family.

Sometimes you have to be inconvenienced to make money, said Phyllis Wallace, a broker-associate for a Better Homes & Gardens office in San Clemente.

"Moving twice is a pain," Wallace said. "But it could mean the difference between getting a good buy and taking a house that's not quite as financially advantageous."

By accepting a double move to suit a seller's timing, home buyers can sometimes get a price reduction of as much as $5,000, she said. For instance, a homeowner who wants to postpone a move until her children have finished the school year may be willing to sacrifice part of her profit.

Flexibility is one key to putting yourself in a good position when you're approaching a purchase. Here are five others.

* No. 2: Shop ahead for lenders and mortgage programs. With the wide variety of loan types on the market, it's prudent to explore the universe of choices before you make a commitment to one sort of loan or another, advised Barrington, the San Marino agent.

Why? Because there are hidden drawbacks to some of the more novel loan programs, in her view.

For instance, she cautions buyers against taking a mortgage that has a balloon payment after a set number of years, which usually means that the homeowner has to refinance. What if interest rates rise or your income falls and you're no longer qualified for a loan on the property in which you're already living?

"Your home is . . . your piece of mind. If you put yourself in too stressful a situation, that home can turn into a house of horror," Barrington said.

She makes the unusual suggestion that home buyers--especially first-timers--engage a certified public accountant with a specialty in real estate to compare the pros and cons of various mortgage types.

Educating yourself on the loan market in advance will help you become a focused buyer, ready to act quickly and decisively when the right house comes along.

* No. 3: Straighten out any financing problems or concerns early. Realtors often call them "credit dings," the little difficulties that typically become apparent only after you've gotten a glimpse of your credit reports. Perhaps there are mistakes on your report that need to be cleared up, or perhaps you'll have to come up with an explanation for late payments.

Either way, it strengthens your stance to have problems straightened out before you become a serious home shopper, said John Ryan, a broker-associate for Prudential Jon Douglas Co. in Ventura.

Ryan also suggests that you confirm other elements of your financial plan in advance. For instance, it's important to be certain your parents are committed to providing you gift money, if that's an element in your buying plan. In addition, you should seek early confirmation of any pledge by your relatives or friends to co-sign your loan documents, he said.

* No. 4: Submit a mortgage application early. Once you've zeroed in on the right mortgage lender and loan type and have cleared up credit problems, you're ready to become pre-approved for financing.

After your credit is checked and your income, assets and employment have been verified, many lenders will virtually guarantee that they'll make you a loan up to a certain sum at a particular interest rate.

Relative to pre-qualification, which offers a less watertight guarantee of financing, pre-approval gives a buyer a stronger negotiating asset, noted Wallace, of San Clemente.

Many sellers are more willing to compromise on terms when they know that the buyer is a sure bet for financing, Wallace explained.

* No. 5: Take a serious look at neighborhoods and commuting time. A big advantage to a home buyer is knowing exactly what you want to purchase--and where, said Barrington, the San Marino agent.

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