HOMEBUYERS: How to Save Thousands When You Buy

When you analyze those successful homebuyers who have been able to purchase the home they want for thousands of dollars below a seller’s asking price, some common denominators emerge.  Although your agent’s negotiating skills are important, there are three key factors that emerge before an offer is submitted.

These Steps Will Help You Save Thousands When You Buy a Home

Ensure you know what you want . . . As simple as this may sound, many homebuyers don’t have a firm idea of their needs and wants before searching for a home.  In fact, when you go shopping for a place to live, there are actually two homes competing for your attention: the one that meets your needs and the one that fulfills your desires.  Obviously, your goal is to find one home that does both. 

When searching for homes, you may find that you fall in love with various homes for entirely different reasons.  Is it better to buy the 4- bedroom home with room for your family to grow or the one with the big eat-in kitchen that romances you with thoughts of big weekend family brunches?  What’s more important: a big backyard or proximity to your child’s school?  Far too often people buy a home for the wrong reasons and then regret their decision when the home doesn’t meet their needs.

Don’t shop with stars in your eyes:  satisfy your needs first.  You need to distinguish between your needs and wants prior to searching for your home.  

Find out if your agent offers a “Buyer Profile System” or “House-hunting Service,” which takes the guesswork out of finding just the right home that matches your needs. vThis type of program will cross-match your criteria with ALL available homes on the market and supply you with printed information on an ongoing basis. 

To help you develop your home buying strategy, use this form:

What do I absolutely NEED in my next home:

1. ______________________________
2. ______________________________
3. ______________________________
4. ______________________________
5. ______________________________

What would I absolutely LOVE in my next home:

1. _______________________________
2. _______________________________
3. _______________________________
4. _______________________________
5.  _______________________________

How Sellers Set Their Asking Price

It is important for a buyer to know how sellers prices their home.  Here are four common strategies you’ll start to recognize when you begin to view homes:

1. Clearly Overpriced:

Every seller wants to realize the most amount of money they can for their home and real estate agents know this.  If more than one agent is competing for your listing, an easy way to win the battle is to overinflate the value of your home.  This is done far too often as many homes are priced 10- 20% over their true market value.

Overinflating the value of your home is not in your best interest, because in most cases the market won’t be fooled.  As a result, your home could languish on the market for months, leaving you with a couple of important drawbacks:

• Your home is likely to be labeled as a “troubled” house by other agents, leading to a lower than fair market price when an offer is made
• You have been greatly inconvenienced with having to constantly have your home in “showing” condition . . . for nothing. These homes often expire off the market, forcing you to go through the listing process all over again.

2. Somewhat Overpriced:

About 3/4 of the homes on the market are 5-10% overpriced.  These homes will, also, sit on the market longer than they should. There is usually one of two factors at play here: either you believe in your heart that your home is really worth this much despite what the market has indicated (after all, there’s a lot of emotion caught up in this issue), or you have left some room for negotiating. Either way, this strategy will cost you both in terms of time on the market and ultimate price received

3. Priced Correctly at Market Value

Some sellers understand that real estate is part of the capitalistic system of supply and demand and will carefully and realistically price their homes based on a thorough analysis of other homes.  These competitively priced homes usually sell within a reasonable time-frame and very close to the asking price.

4. Priced Below the Fair Market Value

Some sellers are motivated by a quick sale.  These homes attract multiple offers and sell quickly, usually in a few days at or above asking price.  Be cautious that the agent suggesting this method is doing so with your best interest in mind.

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