Think you’re ready to buy your first home? Like so many who are eager to own, you’re probably excited to jump right in and check out some open houses. But before you go anywhere, Ryan Serhant, top real estate agent and star of Bravo’s hit reality show “Million Dollar Listing,” says the smartest buyers take a step back to make sure they’re really prepared.
So that you can be taken seriously as a buyer in any market, we invited Serhant to our studios to share some rookie mistakes to avoid.
#1 Mistake: Not knowing how much you can really afford
Shopping for real estate without knowing how much you can realistically afford is a rookie move Serhant sees on a daily basis. Just because you’ve saved 10% of the asking price and have a good job doesn’t mean you should be hitting up open houses every weekend. Unless you’re a millionaire, you’ll be financing your home from a bank. And getting pre-approved for a mortgage will give you the best sense of how much house you can afford.
#2 Mistake: Making an offer without pre-approval
“You don’t want to be the person who puts in the offer, wins the bid, but then doesn’t have the pre-approval when they ask for it,” says Serhant. Depending on what bank you use, getting that pre-approval takes time. Some banks can turn around a pre-approval within 24 hours, but others that are more thorough can take up two weeks. Pre-approval is basically a promise from the mortgage lender that you’re qualified to borrow up to a certain amount at a specific interest rate (subject to other factors, like a home appraisal).
By getting all of that out of the way ahead of time, you’ll be seen as a legitimate buyer and increase your chance of getting into your dream home, he says.
#3 Mistake: Being inflexible
Going in with a healthy offer and being flexible on closing terms can give you a leg up on some of the more inflexible offers a seller has gotten. If you’re competing with all-cash buyers with demanding move-in dates, there is potential for you to look like a more favorable buyer if you’re flexible with the timeline, as long as you’re punctual and put-together with all of the financing paperwork as well, advises Serhant.
#4 Mistake: Poor credit
One of the most important factors in your mortgage loan application is your credit score, so you need to make sure it’s at least in the 600s. In a recent Experian survey, half of respondents had to delay their purchase until their credit scores improve.
If the bank brings up your low credit score as a reason to deny your mortgage application, you can try to find a cosigner to back you up. But in the meantime, start by ordering your free credit score on www.annualcreditreport.com and work to improve your score with your creditors.
Here’s more help on how you can boost your credit score: Can you buy a house with bad credit? and How your credit score is calculated.
#5 Mistake: Countering too many times
During the negotiation process, if you’ve countered more than five times, Serhant says it starts to get annoying for both sides. “The deal will kill itself, there’s mental exhaustion,” he says. To avoid this, the best thing you can do is come in with an educated offer backed by comparable sales and you won’t have that big of a gap to bridge.
Tune in every Thursday night at 9 p.m. EST on Bravo to watch Serhant closing deals on multi-million dollar properties. Season 5 for the NY cast premieres tomorrow April 21st, 2016.