A real estate agent can assist buyers in finding the perfect home that meets their specifications. It’s up to the buyer to determine if the asking price is worth a bid. These five reasons will stop buyers from overpaying.
Stick to a Budget
Cash buyers must determine a reasonable price to buy a home and stick to it. Set aside money for closing costs, home inspection, and title searching. Buyers searching for a mortgage should research at least four mortgage companies and banks for comparison. Work with a loan officer to determine how much mortgage you can afford so you can stay on budget. Like cash buyers, set aside money for real estate fees like closing costs, home inspection, and title searching. A bankruptcy attorney will assist you in budgeting.
Compare Similar Homes in the Area
Home comparisons help you decide whether the desired home is worth the price. Websites like Zillow and Trulia highlight similar homes in the area with your specifications. An agent can find this information too. Look at the price the buyer paid for the home to determine if your future home is worth the asking price.
Include an Appraisal as a Contingency
An appraisal assists buyers in discovering the current value of the home. A typical appraisal is 10% below the asking price or less. If not, buyers must decide whether to continue the sale, negotiate a lower price, or leave. Appraisals above the asking price appear favorable to buyers. Lenders and banks require appraisals, so mortgage holders have this section covered. Cash buyers should use an appraisal as a second opinion on a home purchase.
Avoid Bidding Wars
A bidding war comes from buyers’ emotional attachment to a home. Since they can’t see themselves living anywhere else, they comply with the seller’s terms. Homeowners love bidding wars because it drives up the price. In return, buyers over-deliver for the seller, causing overspending and unnecessary stress with no guarantee of winning. Avoid bidding wars by becoming emotionally detached from the house and making an extraordinary offer on the first try. If the seller demands more, walk away.
Browse During Off-Season
The warm weather and the longer days during spring and summer provide an opportunity for buyers to spend additional time on house hunting and research. Because of this, the buying competition increases, and in turn, it favors the seller. For the best deals, avoid warm weather seasons and search for homes in fall and winter due to less competition and cold weather.
On top of buying and moving, don’t add buyer’s remorse on your stress list. Pay a reasonable price for a home so your mind (and wallet) can rest at night.