5 Ways to Bargain Your Way to a Good Price When Buying Real Estate
I think real estate agents on TV have been trying to train us to pay FULL ASKING PRICE or MORE when buying real estate.
But Donald Trump said in his first book, "Make your money on the front end...
when you buy.
" Well, he's a smart man.
You want to buy right.
You don't want to pay too much.
After all when you purchase an old house, even one that is just a few years old, you may be purchasing a lot of delayed maintenance, structural problems and/or failing systems.
Even if you have the house inspected you may get MORE expensive surprises.
It's pretty difficult to estimate what it will cost you to make the house livable for you and yours, but it could be tens of thousands of $$$ even if a house only needs decorating and paint work.
You also cannot finance the repairs.
Mortgage companies don't loan more than a house is worth in today's financial markets.
You will need an appropriate down payment and a good credit rating to get a loan.
For FHA you need a score of at least 580.
For conventional financing it's higher.
If you want to remodel you will probably have to pay for it out of your own pocket.
So it's important not to pay too much.
Old houses are generally worth less than new construction...
maybe a LOT less.
The new subdivision nearby will have nothing to do with the value of an existing home.
Here are 5 hints on how to get the best deal 1.
Know your market.
You can't spot a bargain without the knowledge to recognize it.
Analyze recent (30 to 60 days) resales of existing homes very near the one you want, preferably in the same immediate neighborhood/subdivision.
2.
The work needed and the inspection will help you at bargaining time.
If the HVAC is old it could be a very expensive thing to fix or replace.
Is the electrical box ready for modern living demands? Is the foundation cracked? Is the roof old? 3.
There is no rule that says the house is actually worth what a seller is asking.
A real estate agent must present any offer to the seller by law in most states.
Any house that needs a lot of work is a house that probably has a motivated seller who doesn't want to do the work.
Use this to your advantage, 4.
If you make a lowball offer...
say 30% or more less than the seller is asking...
be ready for some serious whining, maybe even hollering from everyone involved.
This could make folks really angry.
Do it on the phone instead of in person.
Papers can be signed later after things cool down or you can let your attorney handle it.
It is not unreasonable to make low offers when houses need work.
5.
Be ready to walk away and find another property if they won't deal.
It's just a building.
You can find another one.
Remember, if you overpay you may have to take a loss if you need to sell sooner that expected.
Worse still you will pay a premium for remodeling along with interest for many years to come.
One last suggestion; don't buy a foreclosure just because you think it's a great deal if there are multiple other foreclosures in the area.
If and when they sell, you might be surprised at how low comps would be if you need to sell or refinance any time soon.
But Donald Trump said in his first book, "Make your money on the front end...
when you buy.
" Well, he's a smart man.
You want to buy right.
You don't want to pay too much.
After all when you purchase an old house, even one that is just a few years old, you may be purchasing a lot of delayed maintenance, structural problems and/or failing systems.
Even if you have the house inspected you may get MORE expensive surprises.
It's pretty difficult to estimate what it will cost you to make the house livable for you and yours, but it could be tens of thousands of $$$ even if a house only needs decorating and paint work.
You also cannot finance the repairs.
Mortgage companies don't loan more than a house is worth in today's financial markets.
You will need an appropriate down payment and a good credit rating to get a loan.
For FHA you need a score of at least 580.
For conventional financing it's higher.
If you want to remodel you will probably have to pay for it out of your own pocket.
So it's important not to pay too much.
Old houses are generally worth less than new construction...
maybe a LOT less.
The new subdivision nearby will have nothing to do with the value of an existing home.
Here are 5 hints on how to get the best deal 1.
Know your market.
You can't spot a bargain without the knowledge to recognize it.
Analyze recent (30 to 60 days) resales of existing homes very near the one you want, preferably in the same immediate neighborhood/subdivision.
2.
The work needed and the inspection will help you at bargaining time.
If the HVAC is old it could be a very expensive thing to fix or replace.
Is the electrical box ready for modern living demands? Is the foundation cracked? Is the roof old? 3.
There is no rule that says the house is actually worth what a seller is asking.
A real estate agent must present any offer to the seller by law in most states.
Any house that needs a lot of work is a house that probably has a motivated seller who doesn't want to do the work.
Use this to your advantage, 4.
If you make a lowball offer...
say 30% or more less than the seller is asking...
be ready for some serious whining, maybe even hollering from everyone involved.
This could make folks really angry.
Do it on the phone instead of in person.
Papers can be signed later after things cool down or you can let your attorney handle it.
It is not unreasonable to make low offers when houses need work.
5.
Be ready to walk away and find another property if they won't deal.
It's just a building.
You can find another one.
Remember, if you overpay you may have to take a loss if you need to sell sooner that expected.
Worse still you will pay a premium for remodeling along with interest for many years to come.
One last suggestion; don't buy a foreclosure just because you think it's a great deal if there are multiple other foreclosures in the area.
If and when they sell, you might be surprised at how low comps would be if you need to sell or refinance any time soon.