Great home buying tips in today’s PrimeLending post. Tips #2, Skip Bidding Wars, and #5, Negotiate, are challenging to stick to, particularly in the highly competitive Austin market, but are critical. Wrking with a knowledgeable realtor you trust is a key to implementing these methods. (Don’t have a realtor yet? I’m happy to refer you to one.)
A quality pair of long-lasting jeans. A good mattress. A first-class ticket on an international flight. There are some things in life that are arguably worth paying a little extra for, but the house you buy shouldn’t be one of them. You should buy a house that you love and is functional; however, at the same time, the last thing you want to end up with is buyer’s remorse. Here are some ways to avoid paying too much for a house.
- Stick to Your Budget
As you look at houses, it’s important to have a realistic budget in mind that should include things like closing costs, private mortgage insurance and other important numbers factored in. When you get prequalified, the loan officer you work with can help you determine the maximum amount of home you can afford. This will help you stay within your limits and prevent you from being tempted to engage in bidding wars with other interested buyers.
- Skip Bidding Wars
Speaking of bidding wars, don’t participate in them. When you’ve found a house you’d like to buy, make an offer that is both reasonable and affordable. Today’s real estate market is hot, and in some parts of the country, sellers are getting several offers at once. But getting caught up in the competition to “win” a house can put unnecessary pressure on your wallet and mental health, as bidding wars can be stressful. If the sellers ask you to make a higher offer, and you feel that your original offer was fair, stand your ground and be willing to walk away, if necessary.
- Think Logically, Not Emotionally, When House Hunting
A common mistake that many homebuyers make is getting emotionally attached to a house. The house hunting process usually involves some compromising – it’s unlikely that you’re going to find a home that has every single feature you’re looking for. If you find a house that does, though, it can be easy to get tunnel vision and block out other houses that may also be suitable for you.
You’ll be more likely to talk yourself into paying extra for a house that you absolutely love, but if you can’t afford it or it’s worth a lot less than what the sellers are asking for, you’ll probably end up regretting it down the road. When looking at houses, keep your wish list in mind, but don’t disregard the price tag or rule out other possibilities when you think you’ve found the right one.
- Do Research
You’ll want to find out how much homes in the same neighborhood that you want to buy in have been selling for. These are known as comparable homes, or “comps.” If you’re working with a real estate agent, he or she should be able to help you with this, but you can also do some research on your own, thanks to sites like Zillow. Even if you find a house that seems set at a fair price, you might find that similar houses in the area have recently sold for less. Property record searches can also come in handy – you can learn things like how much is owed on the mortgage, if the house is in foreclosure, etc.
If you don’t think that an asking price is fair, it doesn’t hurt to see if the seller is willing to lower it. In this case, you’ll want to have concrete reasons to support a lower price, so it’s important to have an appraisal done on the house before you even make an offer. Don’t consider yourself to be a great negotiator? Don’t worry — if you’re working with an agent, he or she will likely be the one to do the actual negotiating, as buyers and sellers communicating directly ususally isn’t recommended.
When you’re ready to buy a new house, let PrimeLending help you select the right home loan. Get started today by finding a loan officer in your area.
From the PrimeLending blog by Sarah Crandall