How To Buy Your Home Without Overpaying

Everybody wants to buy a house at some point. Whether you're looking for an investment property, a starter home, retirement property, or just some extra space to call your own, it's natural that you want the best of everything. The problem is that houses cost money, often more than people have budgeted for. It's easy enough to get caught up in the thrill of buying a new place and overpaying without even realizing it - but if you follow these tips on how not to overpay when buying a house, then you'll be able to find the perfect home at an affordable price!

Find Yourself A Good Real Estate Agent

Buying property is a complex process, especially if you are a first-time homebuyer or if you are in the look for a reasonably-priced place to call your own. If that is your case, working with a Realtor can save you a great deal of money in your quest for that perfect real estate.

Real estate agents can ease your path to homeownership because they know the real estate market firsthand. A good buyer’s agent has the necessary expertise to help you with tasks such as finding great home deals, determining a fair property price, comparing costs, and using inspections to your advantage. Your agent can also help you prepare a fantastic offer package, negotiate seller's counteroffers, and more.  

Know What You Can Afford

As a home buyer, it is important that you have clarity about your needs and wants regarding your future home, but that’s not enough. You are probably wondering, "How much house can I afford?" Even though your process might be different from everybody else's, the first step is usually to undergo preapproval with a lender. It is recommended to do so before even starting to think about houses.

The preapproval phase will give you accurate information about your financial qualifications to get a mortgage loan, and based on that, you'll get to determine your actual purchase capabilities. Then, you can either leap to become a homeowner or decide it's not the right time yet and wait until you better your loan conditions by making a few financial arrangements. This can translate into lower interest rates and considerable savings in mortgage monthly payments long-term.

Go House Hunting And Comparing

Now that you know how much you can pay for a house, you are officially ready to start the most exciting part of your home buying process: House hunting! Start by reviewing house listings on your planned budget that meet your preferences. Also, look in the specific places you’ll love to set residence in if you have figured that out already. Narrowing down neighborhoods is useful because it can help you focalize your home search and track pricing and metrics easier.

Look and compare properties that have recently been sold at their price point in that area. This gives you perspective on what is happening on the market and what you can get for the money you have. Once you find that property worth pursuing, check and review disclosures to find out about the house's costs, upgrades, and changes. Those reports and inspections will help you better structure your price, a potential offer, and contract terms. All of this will give you confidence that you are walking the right path towards homeownership.

Understand How Property Prices Work

The price per square foot is the starting point to determine how much you can expect to pay for a property at market value. Take the purchase price of a home and divide it by the property’s square footage. That’s the price per square foot. Check the average price per square foot in similar dwellings or a similar marketplace and compare it with the property you want to buy. That will prevent you from overpaying for that property or any other in the future. Consider that there can be variations based on location, style, features, benefits, or upgrades the property may need.

Understanding the different communities' average prices per square foot will also teach you to search for home bargains. You might be able to identify teaser pricing as well. Teaser pricing is a clever marketing strategy many sellers and listing agents use. It consists of presenting a home for sale at a significantly lower price than similar homes in the area to attract buyers and generate multiple offers.

Stay Away From Bidding Wars

In the real estate market, it is common knowledge that bidding wars are always an advantage for the seller but never for the buyer (especially the thrifty buyer). When there are multiple offers for a property, the seller can play those buyers off each other to get up to a higher price, and if you are one of those buyers, you can end up being involved in some auction situation. You can avoid this by only making in-budget offers and knowing when to retreat.

Look At Days On The Market

Looking at a property's days on the market can be very helpful if you try to buy a home without breaking the bank. The higher number of days a house sits on the market can mean more negotiability options and more leverage for any potential home buyer! Some people believe that if a property is listed for sale for a considerable time, there's some issue with it, but that's not usually the case. The chances are that the house was originally listed at a higher price per square foot than the average in its area.

Have A Winning Offer

At this point of the game, you have all you need to make a solid and fairly-priced offer for that ideal house, but How can you make your offer stand out so you end up getting the deal? You can have a better chance of winning if you put together a spiffing offer package. A successful offer package is clean and clear and often includes documentation such as the preapproval letter from your mortgage lender, bank accounts information or recent bank statements, the signed and sealed purchase agreement, and a signed disclosure package. At this stage of the home buying process, your agent can use their negotiation skills to help you close the transaction on the most favorable terms for you.