Buying a house is something people dream about and may dream on for years and years. Then, one day, a buyer finds the perfect house at the perfect price. The buyer might very well have come across a number of “perfect” houses over the years, but being unable to afford the property remained the insurmountable stumbling block that couldn’t be overcome.
Certain properties are simply way out of the price range of a great many buyers. Location, size, condition, and amenities do drive prices up. In other instances, the buyer makes mistakes and does not realize he/she could make a smaller offer. A worse scenario is a close cousin to this one. The buyer may put a bid on a house that is way more than what the property is worth.
Overpaying for a house can become a fiscal disaster for buyers. Such disasters can and should be avoided. Following a few basic tips could aid in avoiding the unfortunate scenario of buying a home at an inflated price.
Check Out Recently Sold and Similar Properties
Nothing gives a better insight into the sales price of a home more than those homes of similar square footage, condition, and style. Such homes are — for lack of a better description — are copies of one another. (Sort of) No real surprise should exist that these homes sell for similar prices. The sale prices may not be completely identical. They could range $15,000 or $20,000 in price. $40,000 or $50,000, well, that won’t be likely. A home would need to be dramatically different to have such a huge price variation.
Double-Check on Homes Currently for Sale
Sold homes are not accessible to those looking to buy or sell. When the house is on the market, then it is possible to visit the property and gain a first-hand perspective of what the property offers. Checking out several properties and examining them in-person is a must. Such on-site visits absolutely do provide a solid perspective about the property which, in turn, guides the buyer towards making the right bid.
Examine the Market and the Appreciation Rates
Are prices on the way up or are they on the way down? Absolutely do not put a price on a house without knowing where the equity is going. Home values headed up are likely to continue heading up. Property values that are declining could stay in that direction. (Granted, things could change but not without something dramatic occurring) Paying huge sums for property in a region in which property values are on the downswing.
See If The Owner Is Selling The Property
A home sold by a real estate agent costs the seller a 6% commission. Anyone who is putting down an offer on a home should keep this in mind and realize the exclusion of that 6% fee should give the potential buyer a bit more leeway when setting an offer. The seller might not cut the entire 6% off, but 4% could be workable.
Determine What Is Factoring Into Any Potential Appreciation
The houses are not the only things that are built and developed in a particular neighborhood. A lot of changes may be in store for a particular geographic region. If a new shopping mall or other major is being built in a particular region, this may very well send the prices of real estate in an area skyrocketing. It does bear noting that no one can guarantee what home values will be worth based on speculation. However, certain situations are positively do impact appreciation in an upward direction.
Put Forth “Low Ball” Offers
Putting forth a very low offer allows the potential buyer to get a bit of feedback regarding what the seller may be willing to accept. Do not do this without the desire to draw in a counteroffer that will be seriously entertained. To make insincere offers does nothing but waste the time of the seller. Being obtuse doesn’t exactly help the buyer’s cause much either. Be honest with all dealings and do not try to lead the seller on. Avoid ridiculous offers because they won’t provide reasonable feedback and feedback is necessary in order to make the right decision about acceptable buying prices.
Take Advantage of the “Appraisal Contingency”
An “appraisal contingency” is an item that can be added to any home sales contract, but is not commonly found in them. The reason is most would-be buyers are not versed in real estate matters so they do not think of taking these vital extra steps. Consider learning about appraisal contingencies to be yet another reason why it is so wise to perform a little educational research when thinking about buying a home. A “little” clause such as this one could end up saving a buyer a lot of money.
Few people can afford to purchase a home with cash so they procure a mortgage. The mortgage company wants to protect its assets so an appraisal will be performed. If the lender discovers the home is worth less than believed, the appraisal contingency kicks in and allows the buyer to renegotiate — or exit — the deal. The buyer could pay the agreed upon price, but it would have to be in cash. The lender won’t issue a mortgage for more than what the house is worth.
The Art of Finding the Best Mortgage
Yes, mortgage interest rates do play a big part in how much a buyer ends up spending on a home. A high interest rate is going to be a drain on the buyer’s finances. Comparing all the available interest rates is a must in order to get the best and most competitive offer. Otherwise, thousands of dollars could be wasted on an APR that is just too much.
Take Things Slow and Don’t Rush
Saving money becomes a lot harder when rushing into things. A thorough and deliberate approach may require more time and work, but the approach leads to finding the best property at the best and fairest price.