Barbara's Blog - Five Ways Bargain Hunting For Homes Can Backfire

By
Real Estate Agent

Let’s face it, we all want to save money on anything we purchase, especially on a house. This is why we shop for bargains.

This is why many buyers look for For Sale By Owner, foreclosures and short sales for bargain prices. But these are not always plentiful in all areas. Then you have buyers who check housing prices, see which houses have had price reductions, been on the market for a long time or are underpriced for desperate seller and lowball their offers.

These practices can work and many buyers have been successful using these processes. But it can also backfire and here’s why:

The home doesn't suit your needs. If you purchase a home because it is such a great deal you just couldn’t pass up but the home doesn’t really fit your needs. For example, the house doesn’t have not enough bedrooms, the rooms too small, not enough storage space or a small yard.

A bad fit costs you later. A house that doesn’t really fit your needs can cost you in many ways. One way is being too cluttered and not living comfortable so you may need to put things in storage – adding a new monthly bill. Another way is if the house was a bargain but an hour away from where you work, you are now paying and using more in gas and travel time than you would have in a house closer to work. If you bought an older home because it was cheaper, you may pay more in repair bills. And finally you may lose money if and when you decide to sell.

Bargains are rare. Remember that old saying, “if it sounds to good to be true that it probably is?” that goes for bargains in real estate too. Don’t get me wrong, there are times when everything lines up right and you can make a tremendous deal on an amazing house, but that can be rare.

There is always a reason for a home to be priced lower than market value. It could be that the former owner couldn’t afford the home anymore so it is now bank owned which is fine, but it may mean that the house isn’t as well maintained as it could have been. It may also mean that the house needs some work such as some remodeling or minor repairs.  You have to be prepared for the shape the house will be in when you finally move it.

The home needs updating. As I just mentioned, you have to be prepared for the shape the house will be in when you move in. The house may need some serious repair or updating that can be costly. Are you willing to do the work yourself or hire someone to do the work for you? Can you afford the cost and will the cost of the remodeling still make the house a “bargain”? And most important, is the house up to code. An inspection is definitely a good idea with these types of houses.

You lose ground trying to lowball the seller. Most home owners see their homes as an investment as much as a home and want to make some money from the sale of that home. So lowballing a seller may not get you the home that you want. Lowballing also makes sellers less willing to negotiate with you on homes that are priced and maintained well.

If a seller has their home on the market for a long time and decides not to reduce the price, it could be because the seller is not motivated to sell quickly and is unrealistic about the value of the home. Either way dealing with this type of seller and hoping for a bargain will be a waste of your time.

These types of sellers aren’t really willing to negotiate especially if that includes significantly lowering the price.

Foreclosures and short sale properties can take months to close. If interest rates change during that time, you may not be getting the deal you thought you were getting.

Right now, both home prices and interest rates are historically low and there are more and more houses hitting the market so for the most part, you are already getting a bargain on any home you choose to bid on or buy. Just make sure it is the right home for you.

 

 

 

Comments (2)

Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Barbara... you've said it like it is. In the end, you always get what you pay for.

Oct 27, 2014 03:35 AM
Tanya Van Blake-Coleman
Van Blake-Coleman Realty, St. Thomas/www.talk-to-Tanya.com - St Thomas, VI
Improving the Quality of Your Life

Barbara, good post. The bargain homes here in the Virgin Islands are few and far between. If you do find a bargain there is often a reason that may cost you money like you stated. Location may not be as prime as other homes, a lot of work needs to be done or it's not as well maintained. The people that tend to buy these homes are investors that have disposable income and will put work into the homes in hopes of getting steady income from them.

Oct 27, 2014 03:47 AM