9 tips to find the right house at the right price
It might be hard to believe, but real estate bidding wars have broken out in Los Angeles, home prices have risen in Detroit and some south Florida properties have sold just days after the going on the market.
Yes, housing prices overall remain depressed. But some areas are experiencing what looks like a seller's market because demand is outstripping the supply of homes for sale.
That’s great for sellers, but if you’re looking to buy, these 9 tips will help you find the right home at the right price:
Tip 1. Decide what you’re going to spend before you go shopping.
You may qualify for a million-dollar mortgage, but that doesn’t mean you should get one. Figure out how much you can pay for a house without financially crippling yourself.
Tip 2. Get proof you can spend that much.
Ask a lender to preapprove you for a mortgage, so you can prove to the sellers that you have what it takes to close the deal.
Tip 3. Find out what houses are selling for now.
Drive by 25 homes in your price range and desired neighborhoods to get a feel for what homes cost. Your fanny may go numb, but you’ll be much better at spotting a home that’s a real deal.
Tip 4. Consider buying a house with cosmetic issues.
If everyone else is turned off by that 1970s wallpaper, you won’t have anyone else to bid against. You can change cosmetics after you buy.
Tip 5. When you find a house that seems right, base your offer on comparable sales data, not what you wish the house cost.
Your real estate agent can get you the listing sheets from the latest five to 10 home sales in the immediate area. See what homes of the same size, condition, location and age sold for. If the house you like is listed for more than the comparables, include copies of those listings with your offer.
Tip 6. Ask the listing agent what the sellers need other than money.
It's important to know the seller when buying a home.
Do they need to close quickly or stay until they find the right replacement home? Does the listing say they want to keep their beloved chandelier? Don’t ask them to leave it behind.
Tip 7. Use contingencies -- especially an appraisal contingency.
A house costs too much to risk buying one without a home inspection, environmental tests and checking out the homeowners association budget.
An appraisal contingency says what happens if the house appraises for less than you agreed to pay. Ideally, the appraisal contingency says you only pay the appraised value. Second-best option would be that you get to walk away from the deal if the house appraises for less than you offered to pay.
Tip 8. Write a big deposit check for double the customary deposit amount, or more.
If 1% is the common earnest money deposit in your market, write a check for 5%. Nothing says, “Sell to me!” like a check with a lot of zeros.
Tip 9. Recognize the difference between what you want and what you need.
Unless you have to live on the same block as your mom because she’s paying for your home, there’s no single house on the planet that you absolutely must have.
If the competition for the house heats up too much, move on. You’ll get the next one.