Knowing Your Buying Power!

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What is buying power?

Buying power is how much home can you as a buyer afford. The power that you have with your checkbook. What does that mean to us as a buyer? What does it mean to a seller, and how do we use that as power in the negotiations?

Well, those are really good questions and simply put- Buying power is understanding how much house you can afford and how much house you want to afford. Now that can often be a big difference, right? Because a bank could tell us, hey, you know what, you can afford a $1,000,000 home but in your own comfort zone and budget you may say gosh you know what, I shouldn’t be buying more than half. But how do you really know what your buying power is?

You actually sit down and go through all your numbers with a lending professional. So that’s the only person that you can find that out, and it’s so many people in the industry call it being pre qualified. It’s not what it is, it’s understanding how much power you have when you’re going to buy a house. And that’s really what we do- is we automatically, before we really go look at homes, we want you as our buyers to be in a powerful buying position and know exactly what you want to afford on any given day, because that allows us to really find you that house that you’re looking for. And in fact, we highly recommend that you do this before you start searching for homes online simply because- You may be looking in a completely different range than what your buying power is.

And interestingly enough, it’s not always searching for homes more than what you can actually pay for. Quite often, buyers are looking online at homes that are well below what your buying power is, so make sure that we get you in touch with the lending professional before you even begin that home search so that’s really what buying power is. The second question is buying power. What does that mean to sellers? Well, quite frankly, when we’re on the selling side, we may get an offer that looks good, but if we don’t see that bank statement, if we don’t see that someone is really qualified as a purchaser for a home, it doesn’t mean a whole heck of a lot more. It doesn’t and right now, I tell you it is so critical, especially when you’re in multiple offer situations to be able to present a very strong negotiation tactic, when you are submitting offers. Right now you need to make sure that you submit proof of your buying power to the seller and the seller’s agent when you write that offer, because that is a strong negotiation tactic that can help you beat out the competition. So that’s the second one, and then the third one around buying power- As a buyer, you need to make sure that you are working with a qualified, knowledgeable real estate professional who can guide you to understand what your buying power is and use that to negotiate the terms and conditions of your home so that you can get the home that you want.