When buying a home, one of the most important considerations in our choice of property and a critical component of the purchase process is the price. With home prices continuing to rise as the market regains traction, it is more important than ever to be informed regarding the financial considerations to avoid paying too much for your next home.
Follow these six important strategies to help keep from overpaying on your next home.
1. Research the comps. To know what the right price should be for a home, you first need to know what similar properties are selling for in that area. You will want to look at homes that are similar in size and condition. The comparable sales data or comps will give you recent sales information. Make sure to find at least three relatively similar properties in the neighborhood that you are interested in - your Realtor will be able to assist you in finding the correct data.
2. What is the right price for you? The right price for each buyer is going to vary. We all have different thresholds for which we are willing to pay and different amenities that are important to us. Sometimes paying a little more will make sure that you don't lose out on your dream home. However, always keep your bottom line in mind.
3. Shop around for your mortgage. Fees and interest rates vary from lender to lender. Take the time to compare before you decide on the lending institution. This could save you considerably each month on your mortgage payments.
3. Research current events. Find out as much as you can about the neighborhood, the town and the city. It will make a significant difference in the price of a home if there are plans for new schools or if there are negotiations in the works to put a highway overpass close by. You will want to make sure that you don't have any surprises. Also, if applicable, look into the Homeowner's Association, its rules and fees.
4. Have an appraisal. If your appraisal comes in lower than the negotiated price, an appraisal contingency will ensure that you aren't overpaying. You may need to renegotiate the price with the seller or you will have to come up with the difference.
5. Always have a Realtor. A professional real estate agent who is representing you as a buyer will have first-hand, expert knowledge of the local housing market. Realtors' expertise in market conditions and knowing what constitutes a fair price and their ability to represent you in a bidding war could be invaluable.
6. Avoid a bidding war! Don't get trapped into a price guessing game with other buyers for the same property. Don't change your bid. Instead, be preapproved for your mortgage and make a strong initial offer.
While buying a home can be an exciting challenge, you don't have to overpay. Contact me today for more information about the home buying search and what your local market is saying.