Real estate properties are relatively expensive, and it can be disappointing to buy a home only to learn that you overpaid for it. Below are a few precautions you can take to avoid overpaying for a home.
Know Your Fair Price
The first thing is to determine how much you are willing to pay for a particular house in a specific neighborhood. For example, if you are looking for a four-bedroom condo in a specific suburb, you should determine what a fair price (for you) would be for such a property. That way, you can walk out of deals that exceed that price. If you don't do that, you might end up paying more than the worth of a house.
Negotiate
Another tip is to negotiate every possible thing once you locate the right property. You should negotiate the mortgage rate, the broker fee, the closing costs, and even the necessary repairs. Assume everything is negotiable unless you are expressly informed they are not. A few dollars here and a few more dollars there can add up to a considerable saving when all is said and done.
Understand Comps
Real estate professionals consider comparable sales, or comps, when determining the market value of properties. The comparable sales are similar houses that have been sold in the same neighborhood in the recent past. Knowing the comps can help you avoid overpayments. For example, you should not pay $450,000 for a three-bedroom apartment if similar apartments in the areas have sold for under $350,000.
Include a Contingency
Don't submit a purchase bid without relevant contingencies. Some of the contingencies to include are the appraisal contingency and the inspection contingency. For example, without an inspection contingency, you may end up paying full price for a home that has been heavily damaged by pests. An inspection contingency would allow you to renegotiate the price or walk away from the deal if the inspection unearths such issues.
Be Wary Of Bidding Wars
One of the easiest ways to overpay for a house is to engage in a bidding war. A bidding war can easily get emotional where you throw all concern to the wind, and winning the bidding war at any cost becomes your major objective. Go easy on bidding wars unless you are prepared to buy the house at any cost; for example, if you have the money and you have located your ideal property.
In addition to the above precautions, it also helps to use a buyer's agent for the purchase. The agent's skills and experience will help you know the market value of the home. To learn more about your local residential homes for sale, contact a realtor today.
