Buying a home in today’s 2011 real estate market brings uncertainty and excitement. Mostly the uncertainty stems from questions about the stability of home values. Are home values still going down, are they stable, or are they going up? The excitement stems super low va rates, FHA rates and conventional mortgage rates which can set up a scenario where a mortgage payment can be less than a rent payment. And, ultimately what’s behind both of these is the economy.
We don’t have enough time, and certainly we don’t want to get into a debate about how to fix it in this particular article. Rather we’re going to look at few points to consider should you decide to purchase a home that can help you offer a competitive price.
First of all, play poker with the seller. Don’t layout your cards like you can afford more than what you are offering for the home. If you get a pre-approval letter from your lender, make sure that if you qualify for more than the home price that the letter sets your approval at or near the offer price of the home. If you can buy more the seller is more likely to hold a higher price for acceptance.
Second, use a buyer’s agent. If you can avoid it, try not to use the listing agent directly to negotiate with home seller. Listing agents are hired by the seller to sell their home. They are in a position to get paid a higher commission if they sell the home at a higher price. A buyer’s agent can help you negotiate in a way that better represents your buying position – however keep in mind – buyer’s agents get paid based on the sales price too. With this being the case, keep your financing limits between you and the lender if you can help it.
Third, get a copy of the title history on the property you want to purchase. You can tell what kind of money the seller owes on the home which can give you a sense of what sales price they might accept. The title history won’t tell the whole story, especially if the seller owes some unrecorded private debt say for example like a down payment loan from a parent or relative that was kept off the books. Along with what’s owed on the home to a mortgage company and other lien holders like the IRS for back taxes, keep in mind the real estate commissions. Real estate commissions come from the seller of the home, so there needs to be room in the deal to pay both the listing and the buyer agent.
These are just three quick tips to help you with your home buying process. There are plenty more, you can view more here at: the steps to buying a home.