Just like timing the stock market to buy low and sell at the market’s peak, the home buying process has its own timing issues. Let’s review some typical decisions - and pitfalls:
Calculating the Offer Deadline
How long should you allow the seller to consider your offer? Request an answer quickly, and you may scare them off. Wait too long, and they may “shop” your offer. Submit it on a Saturday, and sellers will want the weekend in hopes of more offers. Best bet: present your offer on a Monday. The seller may be willing to respond within 24 hours.
Buy First or Sell First?
Think very carefully about buying a new house before your home is sold. This is especially true in a down market, where your home could take longer to sell. Good mortgage brokers can explain various scenarios and your options, but remember th: in standard Agreements of Sale, buyers can’t opt out or move the closing date because their house isn’t sold. So if you find the perfect home before yours has sold, realize that you may need a “bridge” loan - on either house - to pay for the new one. Those interest costs can exceed 12%.
Interest Rate Timing
Another trap for the unwary: signing an agreement with a closing date three months away. You may agree to extend the closing date to accommodate school schedules or a seller’s needs, only to discover that most lenders won’t commit to an interest rate that far out. Locking the rate in for a longer period comes at a higher price – typically 0.25% interest, sometimes more. But if you opt not to pay, you risk rate increases. If the rate rises enough, you won't qualify for the loan.
Inspection Deadlines
Most home purchases involve an inspection. If you agree to complete your inspection within a few days of signing the agreement to sweeten your offer, beware: the clock starts immediately. If you sign on a weekend, most inspectors can’t be reached until Monday. Throw in a holiday, and your seller may have second thoughts about extending your deadline.
An attentive real estate pro can help you avoid pitfalls like these.
