Don’t Overpay On Your
Next Home Purchase!
Debbie Warford, Associate Broker/Owner
Home Solutions Realty
In this short report I will be covering how to find out what the houses in your area are selling for, one crucial factor that you need to be aware of, some valuable information that most buyers wish they knew, some proven haggling tips, and a secret technique that will severely up your chances of winning a home bidding.
Let’s face it. Buying a home is a big deal, and it’s something you will probably only do one or two times in your lifetime.
This is why trusting a real estate agent is crucial. 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.
I now 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, and you need to be prepared to the best of your ability before making an offer on a home, and don’t 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 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.
You won’t have to worry about being let down because the bank won’t give you the money for the loan, and this will give you a good idea of what homes are in your price range so that you can only focus on those particular homes and not waste your time on looking at something you can’t have.
Once you find the house you want, you cannot be afraid to let it go. Sometimes sellers are asking for an outrageous amount for their home, and just because you have fallen in love with it, doesn’t mean it’s a wise choice to make an offer on it.
This is where your CMA (Comparative Market Analysis) is really going to help you out. You will know right away if the price the buyer is asking is too much because you will be able to refer to your CMA.
We will talk more about the CMA later on in this report.
If the price is above your budget, you’re going to have to be ready to just walk away. It’s important for you to set a limit to how much you’re willing to spend and then stick with it.
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.
It seems that overpaying for a house is a huge problem for buyers in today’s market, and there really is no need for it. Sellers want to sell just like you want to buy and negotiations can be made. We’ll talk about that a little later in the report.
A house is not a product that you can buy at the store one time and then regret it because it was just a one-time purchase. A bad home purchase will remind you every single month of the mistake you have made.
Set a budget and stick to it, but make sure your budget is realistic. Come up with a plan and once it’s time to make an offer, you will be ready.
So here’s what any buyers would want to know about before they purchased a home.
Don’t 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 a seller off than to do this.
If the houses on the CMA and in that neighborhood have been selling for $145-$150k, don’t make an offer for $120k. This will more than likely end badly for you.
Let me give you an example. A Realtor was working with a young for a few months, and against his advice, they made a lowball offer on a house and that offer was $25k less than what the seller was asking.
They young couple knew, from the CMA, that the houses in that neighborhood had been selling anywhere between $145k 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 offerof $130k.
The sellers were now very aggravated and still didn’t move from their original asking price.
The young couple hears a rumor that there was a second offer being made on the house, so being afraid of losing the house, they make an offer for $155k ($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 then they needed to. 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.
Now, for those of you who are ready to buy, I want to point out some very useful haggling tips that will help you get the price you want.
Now, of course, if you’re working with me to buy your home, I will take care of the negotiations and you won’t have to worry about it.
I will start by saying that you should NEVER pay the asking price. Even if you are willing to pay this price for the house you want, you can always get it for at least $2,000 less than the asking price. Whoever is selling the house will also take you more seriously because they know you are going to want to negotiate.
You’ll also want to act very surprised at the listed price. Even if you think that’s it’s reasonable, have the attitude like you think it’s too high.
If the seller won’t budge on the price, you could always ask for him/her to throw things in as part of the deal. A few examples would be paying for the first year of property taxes, giving you some furniture, a year’s worth of lawn care service, covering some closing costs.
And like I’ve already said, you need to be willing to walk away from it completely. If the seller doesn’t accept your offer, walk way. This will tell the seller that you’re serious and they will probably re-consider.
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. You could play on that and let them know that you know they are in a bind.
Another tip I can tell you is to let the seller know as little about you as possible. 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.
Find more homes that you are happy with. Don’t just settle for this one house. If you’ve got more options lined up then you’re already one step ahead the whole time.
Now, let’s finish up by learning how you can find out what houses in the area you’re looking to buy are selling for.
This is a very important step because this not only gives you a pretty good idea of what you’re going to end up paying for your new home, but it’s also crucial to have this information because you definitely don’t offer a price that’s higher than the house is actually worth.
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 to this. 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 primarily focus on the sold properties. Why? Because it doesn’t matter what the other houses on the market are asking for if 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 will focus only on the houses that are similar to the one you want to buy.
If you’re interested in a 3 bedroom, 2.5 bath 2 story, a CMA that list only 2 bedrooms and 1 bath will not help you very much in a densely populated area.
If you want a good CMA, you need to have the similar sales of all the houses in that particular neighborhood or area. Having a CMA from an area 2 miles away may not help you very much either.
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 a real estate agent.
Thank you for taking the time to read this quick guide and I hope it has helped you with your home buying ventures.
Home Solutions Realty
P.S. If you’re serious about buying a home and getting the price you want, call me and let’s chat. There are a lot more elements that we can go over besides what’s in this short report, and I would love to work with you and help out in any way possible. Thanks again.