Don’t Let Bargain Hunting for a New Home Backfire

Don’t Let Bargain Hunting for a New Home Backfire

You’ve been raised to hunt for the best bargain. If you’re plunking down a huge sum of money, why would you buy the most expensive option? That’s crazy talk! But when it comes to buying a new house, is it possible to get too caught up in the bargain hunt and miss out on a house that’s perfect for you?

If you’re knee deep in the hunt for a house and you find yourself thinking “We can find something cheaper” all too often, then it’s time to reevaluate your priorities. You could be losing out on something that’s perfect for you for the sake of saying you found a bargain!

It Might Not Suit Your Needs

Yeah, it might be $20,000 cheaper than the four bedroom home, but can you feasibly live comfortably in a three bedroom house? When you’re choosing between a house that’s more expensive and a house that seems like it has a good bargain price tag, you need to ask yourself a few questions when you’re weighing the costs.

Does the cheaper house offer you everything you need in a house? If it doesn’t, is that fixable? If it isn’t fixable, do you want to be saddled with it for 30 years? Remember that homes that are easy to grow out of are going to be hard to sell to other people. Invest in something that other people are going to want to invest in, too.

A Temporary Bad Fit Will Cost You Money Down the Road

Maybe you can live with your two small children sharing a room, but in five years, will your 10 year old want to share a bedroom with their six year old sibling? When you sell a house that’s too small, too old, or in a bad location, you’re going to end up paying more in transaction fees to sell it than you would have paid with a higher mortgage to begin with. Always consider how long this particular house will suit your needs. If it won’t work for at least 10 years, it’s a good move financially to walk away.

Is It a True Bargain?

Like a car, if it has a really low price tag, there’s a reason. Whether it’s being sold privately or it’s a foreclosure, there’s probably a good reason why the house is being sold so cheaply. The foreclosure probably hasn’t had very good maintenance or a vengeful owner went through and took all of the doors or major appliances to spite the lender. The cheap rancher that’s priced $30,000 below local comparisons might be hiding a major mold problem, a 30 year old roof, or dangerous knob and tube wiring. “If it’s too good to be true, it probably is” holds true in real estate, too. How Much Will You Pay in Renovations? Outdated homes usually sell for fairly cheap, but that’s because updating a home from floor to ceiling can be a significant financial undertaking. A complete kitchen redo can cost upwards of $60,000, and when you’re updating two outdated bathrooms, you probably would have saved more money going with the more expensive house that’s already beautifully updated. Remember that to update a house that passes code, you’re going to have to hire professionals at some point, not to mention paying for inspections to ensure your DIY job isn’t illegal.

Lowballing Will Set You Back

So you can’t find a cheaply priced house and you decide to take matters into your hands. It’s common to negotiate prices in real estate, but lowballing a seller can have some serious repercussions. First, if you lowball too much, you could end up insulting the seller and they’ll refuse to negotiate further with you. If that was your dream house... oops. If your local housing market is fairly hot, someone could come in with a reasonable or full price offer and knock you completely out. While you shouldn’t waste the seller’s time with unrealistic offers, don’t waste your time with an unrealistic seller. If a house has been on the market for a long time and it’s overpriced, that probably means the seller isn’t willing to negotiate on price. Walk away if this seems to be the case. 

If you want to bargain hunt, save those scruples for mortgage shopping. Your mortgage lender won’t let you pay more for a house than it’s worth economically, so instead of looking at the price tag, stick to your budget. You can still find a home that you love and have it fit your needs without going outside of your preferred price range.