So, you’re in the market for a new home and want to be sure you get the best deal, eh? We understand, who doesn’t?! But home-buying can be a tricky business…Luckily, your friends at Choice One Community Credit Union are here to help! We know just how big of an investment buying a home can be and want to see you get the best deal you can. So, to help you achieve that end, here are ten (count ‘em! 10!) ways you can put yourself in the best position to score the best deal on your new home!
- Get Pre-Approved: Before you start looking, make sure you get a pre-approval for a mortgage. This is step one and arguably, the most important! Mortgage pre-approval lets you know the highest amount you can take out based on your income, credit, debts, etc. This will help you to narrow your search to properties that you can actually afford. Nothing worse than falling head over heels for that old Victorian, only to sadly discover, you can’t pay for it…bummer! Plus, your pre-approval also assures the seller and their realtor that you are serious about the purchase and have the funds needed to buy it. Not sure where to go for such? It’s always smart to get a mortgage pre-approval from your favorite credit union, so you will be prepared to make an offer right away! Choice One Community Credit Union offers low fixed-rate mortgage loans for our members! Click here to learn more or stop by and speak to one of our lenders about pre-approval today!
- Go with the Pros: Hire a professional realtor to work on your behalf! An experienced realtor will know if a home is priced right; they can give you an idea of how much room you may have for negotiating, will have greater knowledge about the local housing market in which you are searching and can steer you toward homes and neighborhoods that are in your price range as well. Like a living encyclopedia of local real estate markets! Furthermore, they also have access to the newest listings and may know of homes that will be going on the market before anyone else does, thus helping you get the jump on other buyers in seeing new properties. If those aren’t perks, we don’t know what is!
- Make an Offer: If you are interested, make an offer, simple! So, you took our advice in step two and got yourself a good realtor, who just happened to know of a perfect home that just went up for sale at a great price! Firstly, congratulations! Secondly, don’t let the fact that it’s so new on the market deter you. Take a tour and get a closer look. If you like what you see and it fits what you’ve been searching for, don’t be afraid to act quickly and make an offer! Seriously, we can’t hammer this point home enough! Oftentimes, if an owner is an in hurry to sell, they will jump at the first (reasonable) offer they get. And, the best deals don’t tend to last long! Don’t delay, make an offer!
- Knowledge is Power: The keys to real estate may be location, location, location but the keys to buying your perfect home are research, research, research! Maybe you’ve found a home you like, but aren’t sure if the price is right. Check out some comparable properties that recently sold. Comparable sales can be one of your best tools when negotiating the price of a new home. And, since you’re following this in order, your realtor from step two, can help with this! What did similar homes in that area sell for? What are other comparable properties that are still on the market listed for? Ask these questions and more! Next, check the listing prices of comparable properties that have been on the market for a long time. How does the house you are interested in compare to the others? Is it similar to those that sold quickly or those still on the market? Does it have added value, such as a corner lot or great view? Also, what are the market conditions in the area in which you are looking? Are prices going up or down? Local supply and demand are huge factors when it comes to pricing. In a buyer’s market with many homes listed, prices may be a bit underpriced. On the other hand, if there is a shortage of homes for sale and it’s a seller’s market, home prices may be a bit inflated. In case you’re curious (we’ll save you the time!), typically, today’s market has been leaning more toward the buyer’s! So, good news there! Finally, the last important consideration you’ll need in determining if a price is right is looking at the expected future of the area or neighborhood. Are prospects for the neighborhood bright or bleak? Is the home in a much sought-after school district or an up-and-coming, trendy neighborhood? Again, an experienced realtor can help you with your research…step two for the win! This will all help you to determine if the home you’re interested in is priced correctly or not, and allow you to feel confident you’re getting the best deal!
- What About Foreclosures? Most people don’t even consider foreclosures when it comes to home-searching for a number of reasons. But, you aren’t most people, now, are you?! Which is why you should consider purchasing a foreclosed property! When a homeowner defaults on their mortgage, the lender may repossess the home. The home then belongs to that financial institution and usually, they’ll eventually list the house for sale. Because the home may sit vacant for quite awhile during the foreclosure process, it may need some TLC. Most homes do, regardless. But, if a foreclosed home is what you’re eyeing up, be sure you are completely aware of the condition of the home and cost of repairs and renovations that may be needed. Foreclosed homes may be some of the best deals you can get in real estate (in fact, they generally are!), but they can also turn into cash draining money pits if the property is badly deteriorated, which is why step four is important! #buildingblocks
- Long Listings Can Mean Great Deals: Searching for homes that may have been on the market for quite a while can actually prove to be the best thing you do! Perhaps a home is overpriced, the realtor isn’t exactly setting the world on fire, the home was sold, but the deal fell through, or maybe the listing photos just don’t do it justice. Whatever the reason, the home has been lingering in the listings for a long, long time. Homes like this are definitely worth a look! How motivated is the seller? You may find out that they already made a move to a new home or even across the country for a new job and are now paying two mortgages…ugh, we can’t even imagine! These owners may now be eager to sell, so their circumstances can be to your advantage. A home that has been on the market for a long time may be ripe for the picking!
- All Due Consideration: Before you sign your life away via mortgage and take the leap into homeownership, you need to take all costs of home ownership into consideration, and we mean, ALL! Be sure your budget can handle all of the costs involved in owning a home well before you make an offer. This will include expenses such as property taxes, utilities and any repairs or renovations that will be needed or might be down the line. The last thing you want is to have to walk away from the property because you couldn’t afford it…☹
- Let’s Make a Deal! Your starting bid should be based on what you can afford (remember, you should be pre-approved for a mortgage by now…if not, back to step one!) and also what you believe the house is actually worth. You should also have a maximum amount in mind that you are willing to spend. If a homeowner doesn’t seem to want to budge on the list price of the home, there may be other ways to negotiate! Perhaps the roof is in need of repair and you can ask them to cover the cost or negotiate their leaving all the appliances and lawn equipment as part of the deal, etc. You will make an offer prior to the inspection, so you may unearth other potential high-cost repairs at that time and may be able to negotiate the price down even further. Perhaps the seller can’t move out as quickly as you’d like to move in. Maybe they are awaiting construction to finish on their new home or are planning on a big relocation and aren’t quite ready just yet. Finally, you may even want to ask the seller to pick up part or all of the closing costs, which can be anywhere from usually two to five percent of the home price. These costs usually include the appraisal fee, title or attorney fees, escrow fees, and so on. These can all help to lower your out of pocket expenses, thus netting you an even better deal! Cha-ching!
- Riddikulus is for Boggarts, NOT Real Estate: Harry Potter references aside, when negotiating begins, don’t make a ridiculous offer! Sure, you want to get a great deal, but you don’t want to insult the seller with an extremely low-ball offer either. Remember, this was their home, something that likely means something to them. If you go in too low, a seller may not believe you will be able to agree on a price that will be acceptable to them, or worse, that you’re not serious about buying it at all. It’s important to remember that if you’re in a market where houses are selling very quickly, you need to be competitive with your offer or you may just lose out. On the other hand, to borrow a poker phrase, you got to know when to fold them and walk away. If you really feel the home price is inflated (for whatever reason), not worth what the seller asking, and they are refusing to budge an inch on the price, it’s likely a sign it’s time for a parting of the ways and a continuation of your search. Your dream home is out there; don’t settle and certainly don’t overpay!
- Patience Pays Off: Spring usually brings the most homes to market, but it’s also the most competitive time to buy! More supply + more demand = worse deals. Homes may be selling faster and at higher prices. Not exactly what you’re looking for! However, if you can be a little patient, the end of summer may bring you a good selection of homes and a better bargain! Yes, it’s true, fall isn’t just for sweaters, boots and everything pumpkin spice. It’s for home-buying too! According to Realtor.com, October is the BEST month to buy a home, as this is likely when you’ll score the best deal. That being said, we feel that the time is right when you find the home you love at a fair price that fits your budget!
Purchasing your dream home can be one of the most important things that will happen in your life. At Choice One Community Credit Union, we want you to be well-prepared to fulfill that dream! We’re here for you when you’re ready to get pre-approved for a mortgage or apply for a mortgage loan. With a bit of research, a pre-approval, a realistic outlook and a lot of patience, you can make finding that dream home a reality!
Happy House Hunting!
You can read more helpful tips like this on home-buying and other, fun and financial topics on our Choice Words Blog, new every Wednesday!