Homebuyers don’t want their money stolen. It doesn’t matter what the market is like; it’s vital to ensure you get a fair price. How can you be sure that you are getting a great deal, even if the market is tight? So you can make an informed investment decision, it is essential to understand how to assess the value of any property.
When the norm is to overpay for a house, it’s challenging to get a great deal. However, Q3’s survey of over 1,000 top real estate agents revealed that 87% of homebuyers are willing to pay more for homes with low inventory.
This guide will help you create a razor-sharp house-hunting strategy. It includes clever ways to save money and tips for finding hidden opportunities. You’ll be glad you played your cards right and won’t have to compromise your needs or settle for a substandard home.
Look Out For Recently Sold Houses
Comparable properties are similar in size and neighborhood to the one you are planning to buy. For example, a 1,000-square foot, newly remodeled double-story home with garage should be listed for roughly the same price as an identical 1,000-square foot home in the same area.
You can gain valuable insights by comparing the price of the property to other properties. Is it significantly less expensive than bigger or more luxurious properties? Are smaller, less desirable houses more expensive?
Your agent can provide the most accurate and updated information about comparable properties to you. Also, you can look at similar properties that are in escrow. It means that the property is currently being sold but has not been closed.
Find out the Reason behind Seller’s Decision to Sell
You can make your offer more tailored if you have more information about the seller. Is the seller moving to a new location and needs a fast closing? Are there any divorce proceedings? Is the seller moving to a new location, and would he prefer a longer closing time or a rent-back arrangement?
Use Online Real Estate Listings and Public Records to do Research
You should focus on collecting information about the seller, property, and neighborhood. Find out if the house may be in foreclosure and if the seller is involved in a divorce proceeding. You can also see Google Street View determine if the house was on the market previously and what the price was.
Make sure to look at the property as well as the surrounding area on each real estate listing site. More information you have about a property, the more confident and competent you will be as a buyer.
Look Out For Comparable Properties
You can visit other homes to get a feel for their size, condition, and amenities. You can then compare prices to determine what is fair. If they are to remain competitive, reasonable sellers will price their properties in a similar manner to comparable on the market.
Analyze Market Conditions
Are prices fluctuating lately? Properties in a seller’s marketplace will be more expensive than properties in a buyer’s. It depends on your current location on the boom-and-bust curve of real-estate.
If the real estate market is in an upswing, and the peak price is not yet reached, then properties might not be too expensive even in a seller’s marketplace. If rates have just started to fall, then properties may be too expensive even in a seller’s market. It can be hard to see the valleys and peaks until they are passed. Consider the effects of the mortgage interest rate on your economy.
Search for Short Sale Properties or Bank-Owned
You can also deal-hunt for homes by looking for properties that are in foreclosure or that are bank-owned. According to data from the National Association of Realtors, foreclosure homes were sold at an average discount of 20% below market value as of May 2020.
Short sales may be listed online under “subject for bank approval.” Public records can also help you find short deals. For bank-owned properties, your agent can search the MLS for REO listings or use an online foreclosure aggregator such as the one provided by Bank of America.
However, buying a short sale or foreclosed house comes with its own set of challenges. First, you will need to be prepared to bid on a foreclosure home auction-style. Second, cash is likely to be required. Third, the foreclosure market is fierce when you have to compete with all-cash investors who are looking to rent or flip these bargain-priced homes.
Buy During Offseason
It’s an excellent idea to zigzag when other homebuyers are zagging. Experts say that the best time to begin your house hunt is in March. It is due to increased competition from other buyers and the real estate momentum that tends to pick up in spring.
Instead, start your home search in November before the rest of America falls into a turkey coma. Data shows that home buyers who close by February can save an average of 7.17% on their home purchase if they beat the spring rush. For seasonal trends in your market, enter your city and search for the “Worst Month” for sale.
Test & Compare
You can always offer a lower price than the seller’s list price in a seller market to get their reaction. Sellers list their properties at the lowest possible price because they are unwilling to negotiate. However, some sellers still list their properties for a higher price because they want to see if anyone is ready to buy their house at a higher price or not. You will know if the seller is willing to accept your counteroffer or price adjustment.
Some sellers might under-price their properties to generate interest and start a bidding war. However, unlike eBay, sellers don’t have an obligation to sell to the bidder who bids higher. Sellers have rights to reject any offer that doesn’t match their expectations.
You may be tempted to offer a lower price if you are serious about the property. However, sellers could find it offensive and refuse dealing with anyone who uses such tactics. You may also be at greater risk of being outbid if you offer less than the listed price.
The Bottom Line
It is essential to know how housing prices are set up before you start looking for a house. It will allow you to make an informed decision and negotiate a fair deal with the seller. These tips will help you make an informed and confident offer on any property in any market.