How To Save Thousands When You Buy A Home
When embarking on the journey of buying a home, most individuals have two primary objectives. Firstly, they aim to find a home that aligns perfectly with their needs and desires. Secondly, they strive to acquire the property at the most affordable price possible. When studying successful homebuyers who have managed to purchase their desired homes for significantly less than the seller’s asking price, several common factors become evident. While the negotiating skills of your real estate agent are crucial, there are three additional key elements that must be considered well in advance of submitting an offer.
Three Steps to Save Thousands When Buying a Home
- Clearly Define Your Needs and Desires: Before beginning your home search, it’s crucial to have a clear idea of what you truly want in a home. Many homebuyers make the mistake of not having a firm vision in mind. Remember, you will encounter two types of homes that vie for your attention: those that meet your needs and those that fulfill your desires. While the ideal scenario is finding a home that satisfies both, this is not always possible. When evaluating different properties, you may find yourself drawn to specific features or aspects. Consider whether you prioritize a larger number of bedrooms for future growth or a spacious kitchen for family gatherings. Assess the importance of a sizable backyard versus proximity to your child’s school. It is important to avoid making a purchase based solely on superficial reasons, as this may lead to regrets later on. Prioritize your needs first and be aware of the difference between needs and wants to make an informed decision.
- Utilize Buyer Profile Systems or Househunting Services: Check if your real estate agent offers a Buyer Profile System or Househunting Service. These valuable tools eliminate guesswork by matching your specific criteria with all available homes on the market. You will receive regular updates with printed information on relevant properties. Such programs help you view homes objectively, removing any rose-coloured glasses and enabling you to find the perfect home that aligns with your needs and desires. By leveraging this technology, you can affordably move into your dream home while staying within your budget.
Stay Informed and Proactive: Keep yourself updated on the real estate market trends, property values, and negotiation strategies. Conduct thorough research and seek advice from your real estate agent to stay informed about the local housing market. Being proactive will help you make well-informed decisions, negotiate effectively, and seize opportunities when they arise. By staying knowledgeable and engaged throughout the home-buying process, you can ensure significant savings.
By following these three steps, you’ll increase your chances of finding the ideal home that meets your needs while saving thousands of dollars.
How Sellers Determine Their Asking Price
To understand the pricing of a home you’re interested in, it’s important to know how sellers set their asking price. Here are four common strategies that sellers use when determining the price of their homes:
- Clearly Overpriced: Sellers often aim to maximize their profits, and real estate agents are aware of this. In a competitive market, one way for an agent to secure the listing is by inflating the value of the home. This strategy is commonly employed, resulting in homes being priced 10-20% higher than their actual market value. However, this approach is not advisable as the market typically sees through the inflated price. As a consequence, the home may remain on the market for an extended period, leading to certain drawbacks. These include the home being perceived as problematic by other agents, which can result in a lower offer when one is finally made. Moreover, the seller experiences the inconvenience of constantly keeping the home in a presentable state without achieving a successful sale. Such homes often expire off the market, necessitating the relisting process.
- Somewhat Overpriced: Approximately 75% of homes on the market are priced 5-10% higher than they should be. These homes also tend to linger on the market longer than necessary. The sellers in this category may genuinely believe that their home is worth the inflated price, despite market indications, or they may have left room for negotiation. Regardless, this strategy incurs costs in terms of prolonged time on the market and ultimately receiving a lower price.
Priced at Market Value: Some sellers understand the principles of supply and demand in the real estate market. They conduct a thorough analysis of comparable homes on the market and price their own property accordingly. These competitively priced homes typically sell within a reasonable timeframe and achieve a price close to the asking price.
- Priced Below Fair Market Value: Certain sellers are motivated to secure a quick sale. They intentionally price their homes below the fair market value, attracting multiple offers and resulting in fast sales, often within a few days. These homes may even sell above the asking price. However, caution should be exercised when considering this approach, as it may be suggested by an agent seeking a swift transaction.