We are outstanding in our field
(208) 733-2121
Or call toll free at (800) 660-2121

Don’t Overpay on Your Next Home Purchase

Do you want the chance to pay the price of your choosing for the home of your dreams?

Then you need to read this article, and make sure all of your bases are covered.

Let’s face it. Buying a home is a big deal, and it’s something you will probably only do one or two times. You may get advice from people who claim to be experts in buying and selling homes, but unless they’re in the real estate business, they honestly don’t have a clue. This is why trusting a real estate agent is crucial.

This guide is written for you, the Buyer, so that you won’t make the mistake that 90% of Buyers make in today’s market, and so that you do not overpay on your next real estate purchase.

 

Don’t overpay; where to start?

It seems that overpaying for a house is a huge problem for Buyers, and there really is no need for it. Sellers want to sell just like you want to buy, and negotiations can be made.

So, I want to start by stating a very crucial factor that you MUST be aware of before buying a home. Home buying can be an emotional event.

You need to be prepared to the best of your ability before making an offer on a home, and do not let your emotions override common sense.

Additionally, your financial frame of mind must be in order. The best way to do this is to make sure you have no current financial problems, and also to get pre-qualified for a mortgage.

Pre-qualifying for a mortgage will let you know how much the bank is going to loan you. There are a couple of great things about this:

  • No worrying about being let down, because the bank won’t give you the loan money.
  • It gives you an idea of what homes are in your price range.
  • You can focus on homes in your price range, and not waste your time looking at something you can’t buy.

 

 

Ready to make an offer?

Here are some things a Buyer needs to know before making an offer:

Once you find the house you want, you cannot be afraid to let it go. Sometimes sellers are asking for an outrageous amount, and just because you fell in love with the home, it doesn’t mean it’s a wise choice to make an offer.

  • It’s important for you to be able to just walk away.
  • It’s important for you to set a limit on how much you are willing to spend.
  • It’s important to stick to your limit.

If the price is above your budget, you’re going to have to be ready to let it go. And just because the bank says they will loan you X amount of dollars, doesn’t mean you should find a house that’s as close to that amount as you can get.

Set a budget, stick to it, and make sure your budget is realistic. Come up with a plan and once it is time to make an offer, you will be ready.

 

Also, DO NOT make a ridiculous lowball offer on a house that you know is worth 20 or 30 grand more than your offer. There is no better way to turn off a Seller, than to do this.

This is where your CMA (Comparative Market Analysis) is really going to help you out. You will know right away the price range you should offer, because you will be able to refer to your CMA.

If the houses on the CMA and in that neighborhood have been selling for $145-150k, don’t make an offer for $120k. A situation like this, will more than likely end badly for you. This will, and has irritated Sellers, and you could pay more than necessary in the end (* example below).

 

What is a CMA?

The easiest and most simple way to find out what the homes in the area are selling for is to get a Comparative Market Analysis (CMA for short). In fact, I can do one for you.

I have access to a CMA, and I can always get access. A CMA will show you exactly what properties, similar to the one you want to buy, have sold for. The analysis is based on fact and not opinion. Generally they will list houses that are currently on the market, have sales pending, have expired, and have sold.

When looking at the CMA, you will want to focus primarily on the sold properties. Why? Because it doesn’t matter what the other houses on the market are asking for, they haven’t sold. And those with pending sales are only going to tell you what the listing price is, and not what the house actually sold for.

The elements that the CMA will compare include the number of bedrooms, baths, square footage, the listing price, and the sold price. It’s important that the CMA only focus on the houses similar to the one you want to buy.

If you’re interested in a 3 bedroom, 2.5 bath, 2 story, a CMA that lists only 2 bedroom and 1 bath will not help you very much in a densely populated area.

If you are dealing with the Seller’s agent, and don’t have an agent of your own, you will not have access to a CMA. This is another reason why it’s important to have your own real estate agent.

 

* Example of a possible consequence of a lowball offer:

A Realtor was working with a young couple for a few months, and against his advice they made a lowball offer on a house. The offer was $25k less than what the Seller was asking.

The young couple knew, from the CMA, that the houses in the neighborhood had been selling anywhere between $245k and $150k. They ignored the information, and made an offer of $125k on a house that was listed at $150k.

The Sellers, obviously annoyed by the low offer, declined it, and countered with their original asking price of $150k. The young couple was still convinced they could “steal” this house, and made a second lowball offer of $130k.

The Sellers were now very aggravated, and still didn’t move from their original asking price. The young couple heard a rumor that there was a second offer being made on the house. So. being afraid of losing the house, they made an offer for $155k (which was, as you know, $5,000 over what the Seller had the house listed for). The Sellers accepted the offer, and the young couple paid $7,000 more for this house than necessary. The Sellers would have accepted an offer of $148k, yet the young couple paid $155k.

This is another great example of letting your emotions get in the way. Don’t let it happen. You will regret it.

 

 

Haggling; does it work?

Haggling can work, and below are a few things to know about haggling.

Of course, if you’re working with me, I will take care of the negotiations, and you won’t have to worry about it.

Unlike the example above, we want to get you the best price possible, so I want to point out some very useful tips.

  • You should never pay the asking price. Even if you are willing to pay this price, you can always get it for at least $2,000 less than the asking price. The Sellers will also take you more seriously, because they know you are going to want to negotiate.
  • You’ll want to act very surprised at the listed price. Even if you think that it’s reasonable, have the attitude like you think it’s too high.
  • Ask the Seller to throw things in as part of the deal, if the Seller won’t budge on the price. A few examples would be paying for the first year of property taxes, giving you some furniture, a year’s worth of lawn care services, and/or covering closing costs. Just getting the Seller to agree to pay a majority of the closing costs is going to save you thousands of dollars, because those add up quick!
  • You need to be willing to walk away from it completely. (I believe I have mentioned this before). If the Seller doesn’t accept your offer, walk away. This will tell the Seller that you’re serious, and they will probably re-consider.
  • Find more homes that you are happy with. Don’t just settle for this one house. If you have more options lined up, then you’re already one step ahead the whole time.
  • Find weaknesses in the Seller. Put yourself in their shoes, and figure out why they are selling. This will help your negotiations a lot. Maybe they landed another job in another city, and need to get out fast.
  • Be sure the Seller knows as little as possible about you. The less they know, the better. Any knowledge you provide them could be used as leverage against you. For example, you may be able to pay cash for the house, but you don’t want them to know that, because then they will stay firm on their price, because they know you can afford it.

 

Just remember: Be prepared before making an offer (mentally and financially); Do not let emotion take over; Haggling can work; Trust your CMA; and Trust your knowledgeable agent.

 

Thank you for taking time to read this guide, and I hope it has helped you with your home buying ventures.

If you are ready to buy a home, and serious about getting the price you want, call me and let’s chat. There are a number of elements that we can go over besides what is in this report.

I would love to work with you, and help out in any way possible.

Toll-Free: (800) 660-2121; Office (208) 733-2121; Cell (208) 731-4049

Search Like an Agent

Use this search to find your dream home.

SCHOOL:
MLS#:
Advanced Search >>
Advanced Search
Close

Select A Class