- The Washington Times - Friday, August 4, 2000

You spent an hour checking out every nook and cranny of the four-bedroom palace you hope to call home. You don't even mind the quirky pink pig wallpaper in the master bathroom it's your dream home. So, you get on the phone, your real estate agent writes up a contract and you wait for that call that call saying you are now a proud homeowner.

The phone rings, your jaw falls to the ground. Your offer was rejected.

"It's almost like telling a patient he has cancer," Long and Foster Realtor Bob Shields says. "When a couple has their heart set on a particular home, then doesn't get it, its emotionally draining."

In today's hot real estate market, buying a home is a cutthroat business. In years past, a buyer could search neighborhoods, pick a property and sleep on it before making an offer. But today, a potential homeowner has to be ready to wheel and deal for a property in a matter of minutes.

Therefore, buyers need to go into the process with a keen idea of what they are looking for and the funding for their home wrapped up in a neat little package.

"There's a demand for housing right now," says Elizabeth Dayton, also with Long and Foster. "One of the main reasons a person will lose a home deal is because the loose ends aren't tied up for their funding."

That is why agents today are advising potential buyers to seek out lending institutions before beginning a housing search.

"It makes it easier for the buyer in the long run," says Ros Cohen, a loan officer with Market Street Mortgage Co. in Fairfax. "Their offer is more likely to be accepted if they have already gone through the loan process and have a lender backing up their offer."

Currently, at any given time a house could have multiple offers on it.

"It's a seller's market," Mrs. Dayton says. "Sellers don't have to take the first offer that comes to them. They can wait for the perfect offer. And most of the time, it only takes a few days for them to get what they want out of their homes."

And, with sellers driving the market, it doesn't seem to matter if you give a higher offer than someone else. If you don't have a loan commitment letter from a lender and the other buyer does, the seller won't choose your offer.

In the past year, Mrs. Cohen says, real estate agents have been encouraging their buyers to get pre-approval for a loan, not just a pre-qualification.

Pre-qualification is simply a phone call a potential buyer makes to a mortgage company. The buyer gives an officer credit, salary and other personal information over the phone, and a loan officer will pre-qualify a customer for a certain amount of money. But at this time, the loan officer won't check out the information. The pre-qualification amount a buyer is given to purchase a home is based strictly on the information the client has given to the officer.

"Pre-qualification letters state plainly the loan is subject to verification of all the information the client has given us," Mrs. Cohen says. "[Pre-qualification] is just the first step in the process."

Pre-approval means a loan officer has verified a client's employment information, pulled a full credit report and is putting a set dollar amount on the buyer's purchasing power. Pre-approval means a buyer is guaranteed a loan with the mortgage company, under the terms and conditions outlined in a contract. Sometimes, based on the findings during verification, pre-approval dollar amounts can be lower or higher than the pre-qualification amount given earlier. It all depends on what the loan officer finds when researching the client's financial history.

"Today, sellers are demanding pre-approval letters before they will even review a contract," Mrs. Cohen says. "[Sellers] don't want to pull their property off the market and disregard other offers for someone who is only pre-qualified. They could end up losing in the end if the funding doesn't go through."

Mrs. Dayton and Mr. Shields encourage potential home buyers to look around and make lists of what they want in a home. Then, when the time is right, visit a loan officer, seek pre-approval for a loan and hunt for that perfect home.

"I think it's important for a client to visit face-to-face with a loan officer before deciding on a company," Mrs. Cohen says. "A home buyer needs to feel comfortable with the loan officer. They need to feel like they can ask questions, make comments and are walking away from the deal informed."

In a perfect loan processing world, a couple can enter Mrs. Cohen's office and walk out a few hours later pre-approved for a loan.

"But that's if their paperwork is in order and they come prepared with the proper documentation," she says. "Many people haven't saved the important papers we need in order to process a loan application."

To expedite the qualification process, a loan officer needs copies of two months of bank statements, two years of tax returns and W-2s, two pay stubs and documentation of any outside income that will be used for a down payment.

"Once we have these items, check out a person's credit and figure out what they can afford, then their next step is finding a home," says Mrs. Cohen, who has been a loan officer for 11 years.

Finding the perfect home used to be the easy part of buying, but in a market where there are about three buyers to one home, it's almost becoming a bidding war.

"We have literally written offers to give to sellers minutes after showing homes," Mr. Shields says. "When buyers find what they want, there isn't time for them to think about it. They have to act immediately."

But Mr. Shields and Mrs. Dayton say quite a few buyers today do not understand the urgency and might think their agent is being pushy and aggressive.

"Unfortunately, a lot of buyers today are transferring in or moving from other areas and don't understand our economy out here," Mrs. Dayton says. "Not only are prices and costs of living higher, but the [real estate] market demands quick action."

By meeting with an informed agent, a buyer will be walked through the steps and the the important aspects of home buying will be explained. While the process is time consuming, it can be enjoyable.

"There is a certain amount of stress involved when buying a home," Mrs. Dayton says. "But if the [real estate] agent is doing his job, then he will walk the buyer through it and make it as painless as possible. After all, buying a home is one of the most important investments for a family."

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