You probably have already heard the usual home buying tips. Here are three that aren’t as common but help to land houses that are cheap and below market price.
Home Buying Tip #1 – Buying A House Isn’t Always The Best Plan
Of course real estate agents may say that buying a home is always a good idea. It certainly is good for them, as well as for title companies and bankers. But it isn’t necessarily a good idea for you.
Believe it or not, there are towns where the home values haven’t gone up much – if at all – in ten years or more. Of course in the last year (this is being written in 2007) the prices in many areas have actually dropped in value. The point? Home values do not always go up – at least not in a given year or even several. So don’t buy a home as a get-rich plan.
Maybe you are sure that prices will rise where you are. Even then, though, a home isn’t necessarily a good investment, if rents are low relative to home prices. In Tucson, Arizona, for example, a two-bedroom home might sell for $190,000, but you can rent one for just $750 per month. If you spend $700 less each month versus buying, and bank that money, you could be further ahead financially three years from now.
Consider how long you’ll be in the home. This is important because of transaction costs. Buying and later selling your home can cost 10% of the home value. It will have to go up that much in value just to even break even. If you move in the first couple years and prices have gone nowhere, you’ll end up thousands of dollars further behind. If you aren’t going to be in the home very long, it may be best to make another decision and find a different place to live.
Home Buying Tip #2 – A Real Estate Agent Is Not Your Friend
Even if your agent actually is your friend, she won’t necessarily look out for your best interest. In fact, she can’t, if she is working for the seller. Unless specifically is working as a buyer’s agent, she is legally obligated to work for the interest of the seller. The seller, after all, is the one paying the commission. If you say something like “I might go $5,000 higher,” she is obligated to pass on this information to the seller.
Even with a buyers agent, be careful, because people talk – even good agents. Don’t say things you don’t want known by all. Also keep in mind that agents make money only when there is a sale, and they make more on larger sales. This might mean less than perfect objectivity when helping you choose a home.
Sometimes, it is even just as good to bypass the agent altogether if you are sure that you can make a nice and soldiery decision without falling for any other traps. This is because the agent may rush yo into buying a home because ultimately it is good for them if you purchase the house for commission. If you are able to buy without their help, you can save money as well because you wont have to pay for the agent fees.
An agent isn’t always the most reliable person that can help with a home. Sometimes your gut decision works best too, even though an agent has a lot of knowledge. They are very focused on making money for themselves that they might not help you make the best decision that is ideal for you and your family.
Home Buying Tip #3 – Low Offers Work Sometimes
The real estate agents out there won’t appreciate this tip, because low offers are embarrassing for them to bring to a seller. It may even be embarrassing for you to make the offer. However, I have a friend who embarrassed himself into a lakefront home for 15% less than it was worth. Would you like to immediately increase your net worth by $40,000 when buying a home?
Here’s how low offers work: rarely. You’ll let many nice homes get away, you’ll spend a lot of time making offers, and you’ll annoy real estate agents. However, as long as you don’t have time constraints, or the fantasy that there is one “perfect” house for you, making low offers can be a good way to save money. But here’s one last home buying tip: If none of your offers even get you a counter-offer, you may really be wasting your time and trying to go too low.
If you continue to make low, but reasonable offers, there is a very high chance that you will find a winner house that comes into your price range. Surely, one house will come your way with a price that may be reasonable to you. Making low offers is a good idea most of the time, even though it may be hard to find a winner right away.
These are 3 home buying tips that are pretty hidden and not many people generally resort to them, but they can help you find a nice home that is cheaper than the market value – and fast!