Guide to Buying a Home: 7 Ways to Get the Best Deal
Attention, coupon-clipping queens and Craigslist kings! If you’re an avowed bargain shopper who believes only chumps pay full price, the thought of purchasing a home at (or sometimes even above!) asking price can be painful. You're used to shopping around and weighing all your options before taking the plunge—shouldn't that be the case on something as expensive and significant as real estate? Surely there are ways to go about buying a house with the same fiscal savvy you bring to other purchases in life, right?
Yes, indeed. And we're not talking about merely submitting a lowball offer. No, we're talking about tactics. We’ve pulled together some tips to help you level up your real estate game.
1. Keep an eye on 'price reduced' properties
If a home has been languishing on the market, the sellers might be eager to cut a deal—even if the price has already been reduced. Listing websites make it easy to find homes whose prices have been cut.
You can also contact a local real estate agent who will have extensive knowledge on properties in specific neighborhoods.
2. Sweeten the deal for the seller
Try to understand the sellers' specific needs and situation. Do they need to relocate for a new job, like, yesterday? Offer to move up your closing date. Do they want to finish out the school year in their old home? Let them stay put for a few extra weeks after the sale—in exchange, of course, for a reduction in price.
It never hurts to ask your agent to speak with the listing agent to find out what terms might make the sellers jump at a lower offer.
3. Look for a kitchen with potential
An ugly kitchen can drive buyers away, causing a home to sit on the market for months. So instead of fixating on an HGTV-worthy dining and entertainment space, look for a kitchen you can work with. Are all the appliances in good working condition? How's the flow and layout? Then consider the things you can easily fix.
For example, for a relatively modest investment, you can repaint solid wood cabinets, update the lighting, replace the faucet, add distinctive cabinet pulls, and redo the floors and counters. Then you'll have a kitchen you'll swoon over.
4. Make an all-cash offer
Even if your offer comes in a little lower than asking price, the words “all cash” can go an awfully long way.
"Cash buyers generally have an advantage when there are multiple offers on a property," says Anne Elizabeth Oliver, a Realtor® with Roy Wheeler Realty Company in Charlottesville, VA. With a cash offer, sellers won't have to worry about the deal falling through because of an issue with the mortgage or appraisal.
Also, if the seller needs to close the sale fast, a cash offer could catapult your offer to the top of the list. Of course, this tactic is fully dependent on whether you have that very big chunk of cash available.
5. Put down at least 20% to avoid paying mortgage insurance
It's not exactly groundbreaking news, but you can’t beat the benefits of offering a substantial down payment, says Denise Supplee, a Realtor with Long & Foster in Doylestown, PA. By putting at least 20% down, you can avoid having to pay costly mortgage insurance and help keep your monthly mortgage affordable.
6. Find a home that's being sold 'as is'
Homes that are listed "as is" are often in disrepair because the sellers can't afford to fix the flaws. They're typically listed at a lower price that takes into account the cost of repairs or upgrades that the seller might normally be expected to make. This situation can net you a great deal. Plus, you can make sure that repairs or replacements will be completed to your liking.
7. Shop mortgages to save big bucks
Start inquiring with different mortgage lenders around three to six months before you plan on buying a home. You can compare rates and, if necessary, spend time boosting your credit score. A FICO score of 760 or higher will qualify you for the best interest rates, according to Richard Redmond, mortgage broker at All California Mortgage in Larkspur and author of “Mortgages: The Insider's Guide.”
A solid-gold credit score is as good as money in the bank, because it can significantly lower your interest rate, allowing you to pay less every month for the life of your loan. Make sure your credit score is 660 or higher to be approved for any mortgage at all.