These are some great tips to get a better price when buying your home.
Buy a Neglected Property
There are times when you see ads in the newspaper that tell you that a property has been slashed in price by 15%. You can save $20,000 when you buy. Such ads may be put in the home owners themselves or by the real estate agents. Your first reaction might be to think that this sounds like a great deal. But perhaps you can better look after your interest by being cautious. Perhaps the property was overpriced before or perhaps it has some major flaws that make it a problem to sell.
It is not impossible to find a deal on a home where you pay much less than the fair market value. But in order to succeeded in this you either have to be just plain lucky or prepared to do some hard work of looking around and putting in an abundance of time and effort.
You can target a property that has not been taken care of and is underpriced for simply this reason. Sometimes the home owner and the agent do not take much care in putting in required repairs and maintenance which results in the market value of the home to be lower than other similar houses on sale. You can take advantage of such a property and save yourself some money.
The easiest repairs to implement are cosmetic repairs such as landscaping, repainting the walls, refinishing the hardwood floors etc. You should be careful when you come across such a property. You should ascertain that the property does not have any major defects or requires major repairs to be conducted. ]
If this is the case, not only will it take up a lot of your time but also may end up costing you more than you saved on the upfront cost of the home. Besides, you do not want to spend the next few months putting in repairs and fixing up the property in order to make it liveable.
This is where the assistance of a competent home inspector comes in. Have the property properly examined by a qualified and professional home inspector. Make sure that there not too extensive repairs involved or major changes with reconstruction work required.
Buy When The Economy Is Slow
Buying a home in an economy that is slowing down can be a great way to purchase a home at a bargain and throwaway price. When things are on the downturn in the economy, you might suddenly find that several houses are listed for sale and at a reduced price. For some reason, people are wary of making large investments such as purchasing a house or even buying investment funds from banks when the Interest rates are falling and the stock market index is on the low side.
Common sense should dictate that the kind of prices that you can get during this time will not be available when the economy is booming and surging ahead. However, a major reason why people are uncomfortable with making large investments at this point of time is because of job insecurity.
However, as long as you’re not buying a home for investment purpose, you are going to be a homeowner for several more years. If because of the slowdown there is a further decline in the value of the home, it is not going to effect you.
If the prices on the homes for sale are competitive now, and you can afford to make the payments on your mortgage loan then there is not much reason why you should hesitate to buy.
You will probably never get prices as good as this and will be glad you bought the home when the economy recovers and the real estate starts to pick up again.
People tend to panic when they loose equity in the home. It does not matter. It will only matter if you try to sell. As long as your home is your home, there is no cause for worry. The prices will come up eventually.
There are several factors that tend to correct the prices of real estate. There are several signs that you can watch out for that indicate that the soft prices on the forms available today might be on an upsurge in the near future.
- Rising cost of renting, which may bring the cost of renting a house closer to purchase which will in turn make more people want to buy, creating more of a sellers market and increasing the home prices.
- Cost of purchasing a home being almost same as renting a home in which case many more people will prefer to buy leading to a reduction in the available inventory of available homes on the market.
- Number of homes available for rent and for sale becoming smaller, leading to more competition amongst potential homebuyers and thus pushing up the purchase price of the available homes.
- Absence of major new housing projects coming up in the area leading to a higher demand for the existing housing units.
When the economy is experiencing a downturn and the prices on housing is low along with the interest rate on mortgage loans, this could be the best time to make a home purchase. As long as you are confident of paying your mortgage loan in the future, and don’t expect to sell the property in the near future, you have nothing to loose. You will be able to buy MORE of a home for a lesser price.
Find A Motivated Seller
Another way to take advantage of competitive home prices is to find of motivated seller. A motivated seller is a person who typically wants to sell his house quickly for any number of reasons.
- He could be in a hurry to sell because he wants to purchase a new house and meets the proceeds from the sale of his existing house.
- He might be shifting to another location on a short notice.
- There might be some major changes in his life such as getting married which requires him to sell as quickly as possible.
- The homeowner may also be facing financial difficulties forcing him to sell in order to avoid a short sale or a foreclosure by the bank on his home.
While sometimes, sellers will profess in an advertisement that they are in a hurry to sell, usually they withhold this information so that they do not loose the bargaining power. However, many personal homeowners will not mind sharing this information.
Also, real estate agents do not mind disclosing such information as they are more intent on making the sale than anything else. Knowing the reason behind the home owner selling the home can give you a slight advantage when it comes to negotiating a better purchase price. So feel free to ask for the reason of the sale.
Buy During Off Season
Like most businesses, even real estate has its peak periods as well as slow periods in an year.
By slow periods we mean a time in a year when not many buyers are looking to purchase a home. Different regions in the United States may have different times of the year in which the real estate sales are slow. However, holiday seasons such as the time around Christmas and Thanksgiving are typically slow for the real estate business.
When there are less buyers in the market, the competition for the available housing units is lower. Sellers may also offer bargains and sale prices on the housing units in order to attract more homebuyers. It is possible to take advantage of this and get the better price than you would in the peak season when multiple bidders are vying for the same property that you are.
Another time which could be slow moving time for the real estate market would be during the months of July and August when many families prefer to take a vacation. Also, the families who wish to purchase a home before the new school semester have probably already done so.
Similarly, people tend to not purchase a home during cold winters. Depending upon the area and the state that you living in the United States, the severity of the winters could last from a couple to as late in the year as April.
The real estate sales can slow down in the colder and northern parts of the United States till the month of April. Similarly, in the hotter southern parts of the United States, people might not be looking to purchase a home in the peak of summer and prefer to stay at home.
All these times that you can expect the real estate market to be slow, you can also expect to get a better price on the homes for sale. However, it is extremely important to note that many smart buyers will not put up their property for sale when the real estate market is going through a slow period. They will want to sell during the peak times when they can get the best price possible.
You should also know that the properties that are left for sale after the peak season may be the rejects that nobody really wants to buy and for good reason.
At the end of the day, you should not count on looking for a home only after the peak season is over. The best of homes may be gone by then. But this is something that you must keep in mind anyway.
Learn to Negotiate
As we have said several times before, you should not get too hung up upon the current price of the home and whether or not you can get a slightly better price a few months down the line. The important thing is to be able to find the home that you want and to purchases it at the price that you can afford to pay back in the future.
A small difference in the price that you purchased the home for will fade to insignificance after having owned the home for many years which is probably your intention.
One of the last points that we would like to make regarding getting a home at the fair market value is to be able to negotiate with the seller.
It is usually important to be in a position of strength in order to negotiate. For example, if it is a sellers market where several buyers are vying to purchase the same home as you, then you are likely to luck out with trying to make this reduces price. However, there are many kinds of negotiation possible and you may be able to get the seller to offer you a better price by simply being a nicer person.