5 Tips To Get Great Price On A Home

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.

how to get a good price when buying a home

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.

Should You Buy When Home Loan Interest Is High?

We are often asked a common question: “Should I put off buying a home because the loan interest rates seem to be on the high side at the moment?”

Read about how interest rates effect home prices and what you ought to do.

It should seem logical that the interest rate on a home loan should impact the prices of homes as well. Having a lesser interest-rate can make a larger home loans more affordable.

Consider the following example. $100,000 at the fixed-rate mortgage interest rate of 6% will have a monthly mortgage payment of $600. At an interest rate of 10% of the mortgage payment increases to $878.

buy or wait when home loan rates are high

So it should be true that when the interest rate on a home loan is low, a borrower can afford to purchase the more expensive homes and seek and afford to borrow more.

However, this is not usually how it happens. In many parts of the US in the late 1980s and early 1990s the home prices experienced a downfall in spite of the fact that interest rates were also declining. Similarly even though the interest rates were becoming higher in the late 1990s, home prices are rising as well in many communities all across the country.

This is a clear indication that other factors influence the prices of homes as well. One of them is the fact that lowered interest rate on loans makes building housing at low cost possible as well. The supply and demand for housing which is connected to the overall economy health of the community also plays a large part. In times of economy boom, both the demand for housing and the interest rate on home loans can increase simultaneously. This is not uncommon and happens often.

The point is that if you are ready to purchase your home now, the interest rate on a home loan should not be a very significant factor specially if you are intending to purchase a home for a long time.

If you are purchasing the home as your regular home where you are going to stay for the next decade or so, you will have plenty of opportunity to refinance if the interest rate on a home loans and mortgage as happened to decreased substantially.

Also, the value of the home that you purchase is only liable to increase in the future which will give you the growth in your equity and make it easier to refinance as well.

Effect Of Availability of Housing On Home Prices

How Availability of Homes Affects Their Sale Price

All factors that affect the prices of real estate and homes in a particular area such as the availability of jobs are all tied to one ultimate factor which is the demand and supply it off the housing. The availability of housing in a particular area has a huge impact on the prices. Growing employment rate and growing population rate may still out to appreciate the value of housing prices if there is already an overabundance of available homes and real estate. Conversely, an area that has a low employment growth rate may still see a surge in the housing prices if the availability of housing complexes and real estate is on short supply.

Basically, this is a little like competition between different businesses. When the people wanting housing is more than what is actually available, there is going to be a competition for the same real estate which is likely to drive the real estate price higher. Having a look at the vacancy rate is a good way to measure how much demand there is for existing housing. The vacancy rate can be calculated simply by dividing the number of empty and un-rented rental units by the total number of rental units available. So for example if 50 rental units are vacant in town and 2000 total units are available, the vacancy rate is 2.5%, [50 divided by 2000].

When the vacancy rate is low, there is more competition for the available rental units which is likely to drive up rental rates as well as price of real estate property in the future. Having high rents on a property also makes renting unattractive driving people to purchase homes rather than rent.

Conversely, a high vacancy rate may indicate that more housing exists than the demand. Excess of rentals tends to depress the rent as landlords are trying to find tenants for the properties. All other things being equal, more than 7 to 10% and increasing vacancy rates are generally a sign which are bad for the real estate sellers but good for prospective home buyers.

Another way in which you can get an idea about the availability of future housing in a particular area is to see how many building permits have been applied for. You can have a real estate investor look into the number of building permits that have been applied for in the recent past. This can tell you about the trend of housing in that area for the future. For example, a lot of building permits filed might mean that the housing is going to be in abundance in the near future which will result in either no appreciation or even depreciation of home prices. This is because many builders usually get into a new housing market to capitalize on high rising prices. Such an increase of happens after a sustained rise in housing prices in a particular area and the subsequent growing demand.

Conversely, depressed prices or high cost of building can lead to little or new housing being developed.

The supply of housing is also determined in part by the amount of land that is available to develop. A limited supply of land indicates the trend of rising and appreciating real estate prices in the long run. Therefore prices of real estate has appreciated quite a lot in areas such as Manhattan, San Francisco and Hawaii because they happen to be surrounded by water. Conversely, home prices tend to rise more slowly where there are wide tracts of land available for development.

Effect Of Employment Opportunities On Home Prices

The availability of jobs directly affect the prices of homes in an area, community or state.

A home costs money to buy and maintain. A regular consumer who buys a home by taking her home loan, expects to be paying off the price of the home for the next several years. Whether this money come from? From the person’s job and his career. So it goes to say that in a place where jobs are in abundance and wealth the employment is increasing, so will the real estate prices. In places that has a healthy employment ratio, more and more people are going to look to purchase a home. This also ties up the factor of availability of jobs to demand and supply. Since more people can afford to buy a home, more people will be targeting similar properties. This means that the home prices in that area are not likely to decline in the future but only increase. The rate of inflation is also something that should be considered hip. A home and its accompanying expenses are one of the biggest sources of expenses that a person is lucky to have. Therefore it stands to reason that the demand for housing and the ability to pay for with our deeply connected to the abundance and quality of jobs in a particular area or community. From an investment point of view, an ideal area to purchase an investment property will be where the job rate is high, there is adequate job diversity and the quality of the jobs being offered is highly as well.

Jobs and employment drive home prices in the following ways.

Job growth

It is not only about having millions of jobs available in a particular area but also about creation of new jobs. While an area may have existing employment, if there are no new jobs available, it is going to affect the prices of the real estate as well. Job creation is as important to a healthy local real estate market as anything else. Check the unemployment situation and examine how the unemployment rate has changed in recent years. A declining unemployment rate and increasing job growth is usually a pointer towards appreciation of the value of real estate and home property is as well.

Job diversity

Look for a place where there are many different kinds of jobs available rather than a community that is dependent upon two or three companies and businesses. Several smaller towns have a community built around one major manufacturing business or industry. This kind of a scenario is slightly risky because if that business happens to go under, it will hurt several thousand people who are staying nearby who were then have to look somewhere else for their livelihood. With no industry or financial economy to support people, the real estate prices are going to plummet as well. This has happened in several smaller communities that were badly affected when large defense manufacturers and military bases lost many employees due to defense cutbacks. A small town or community being dependent upon just one or two business was a common scenario in the 50s and 60s. These communities thrived and lived happily for several number of years. However, given the volatile economic situation, this kind of situation has become slightly more risky than it used to be before. If you happen to be working for the business or company, you may have no choice but to stay in that area and purchased a home there. However, from the viewpoint of an investment property or purchasing a home when you are not dependent upon that industry or business that is the lifeblood of that community, you might want to look elsewhere.

Quality of jobs

All kinds of jobs are not equal. In some cases, quality does matter over quantity as well. If an area has faster growing jobs in growth industries such as technology, that area is likely to see the job growth in the future. If these areas also offer more high-paying jobs, real estate in that area is expected to appreciate faster. When most of the jobs in a particular community come from the slow-growing or shrinking employment sectors such as farms, small retailers, shoe and apparel manufacturers, real estate prices are not likely to rise in the near future years. In fact the prices in these areas may decline if the number of jobs and employment opportunity happens to decrease.

You can gain access to the data that gives you the perspective on the employment statistics of a particular area by accessing the records of the US Bureau of Labor Statistics which compiles the employment and unemployment records. You can access this information on the Internet through your computer by visiting www.bls.gov or even find the same information in a good local library or chambers of commerce. A real estate agent may also be able to help you locate this information.

6 Reasons Why Prices Of Homes Rise and Fall

In this post we talk about how to determine the present and future value of your home, what are the factors controlling the prices of homes and how to spot a future trend of prices for homes in your area.

If you are contemplating buying a home, you might want to know whether the prices of homes are going to increase or decrease in the future. This might affect a decision to a certain degree where you might want to find the best deal possible. People want to buy a home and get the best price possible.

So if the housing prices are likely to decline in the future, a person might decide to wait for some time before making the purchase. Similarly, if the rising prices are likely to increase, you might want to purchase a home right now before the home that you want becomes unaffordable.

The truth is that the prices of homes and the way they fluctuate depends upon several factors. The housing industry specifically, as compared to any other kind of a market, experiences more ups and downs. Similarly, it is just as difficult to predict the exact trend of housing prices in your particular area or community.

By the end of the day, the housing prices depend upon several factors like the economic vitality, financial health and the demand and supply of housing in a particular idiot. It is not uncommon to find that even giving an economy downturn, in a certain state or area where the demand of housing is high, the prices continue to increase whereas in other sections they are on a downfall.

why do prices of home change

The important thing to consider here is that when you purchase a home, you are likely to own the property for several more years. During this time of ownership, you are likely to see several downwards and upward trends as far as the prices of homes are concerned. Therefore, you should not get too hung up about the future trend of home prices and make the decision based on your present ability to buy your dream home.

Your loan affordability and your ability to pay off the home in the future is probably the most important factor. Predicting what might happen with real estate prices in a particular neighborhood, town or region over the next two, three or more years is difficult.

If you decide to wait for the home prices to decrease further than what they are for no other reason than the fact that you can expect to save some more money, you might be waiting for a long time, which is something that has happened to more than a few people. If you can afford the house right now and comfortably pay it off in the future, you must give it serious consideration rather than get too hung up about whether prices are headed in the future.

Conversely, if you only expect to hold on to the home for a short amount of time let’s say 3 to 5 years, the price that you purchase it for makes a bigger difference. The shorter the time period that you expect to hold on to your home number the more important it is to be careful about when you buy. This is to ensure that there is no quick fluctuation in the near future that causes you to lose money when it is time for you to sell the home and move somewhere else.

Also, buying a home a home and selling when there is not enough time in between the two to let the equity in the home grow, will result in a loss for the home owner. This is because of the cost of selling the home such as evaluation, appraisal, documentation and many other fees that are similar in nature to those you have to pay when buying a home.

However, even if you expect to stay in the home for a long time, understanding some of the factors that cause the home prices to rise and fall is a good idea. You’ll be able to maximize the amount of money you save and get a good buy that will be worth your while. In this section we will talk about the few various factors that drive the real estate market prices.

Factors that drive real estate market prices.

Purchasing a home might be the biggest liability that you ever take, and for most people it is also the biggest investment.

The money that you invest in buying a home has the potential to be here biggest investment with the most fruitful returns in your lifetime. When you look at the factors that drive the prices of real estate, you may want to look at the whole aspect from an investment standpoint.

People buy properties for different reason, some as their own to live and others as investment properties to sell in the future or to rent in the meanwhile. These are some of the factors that affect the prices of homes in a community, town, region or state.

What you should know right now is that what is good from an investment point of view when buying a home or a property is very likely a dis-advantage for a first time home buyer looking at a long term homeownership. For example, if the prices for real estate are fast escalating in your area, it is great news for investment property buyers.

However, if you are a first time home buyer, you will be troubled by the constantly rising home prices, making the houses more unaffordable every year and making it equally difficult to accumulate that downpayment. We speak for a ‘first time’ home owner, because existing home owners usually sell their current properties before buying a new one.

Home prices are like corks floating on water. They mostly go up and down at the same time. So while the cost of buying a new home may be high, the existing homeowner will not feel the pinch so much because he will get a similar high price when he sells his existing property.

The factors that control home prices mainly are:

  • Employment ratio and creation jobs and growth opportunities.
  • Demand and supply ratio of the number of homes available and the number of people wanting to buy.
  • Number of homes available for sale.
  • Cost of renting as compared to cost of homeownership.
  • Potential for future housing development.
  • Interest rate on home loans.

We will discuss and explain all of these in the next few posts.