If you're like most homebuyers, you have two
primary considerations in mind when you start looking for
a home. First, you want to find the home that perfectly meets
your needs and desires, and secondly, you want to purchase
this home for the lowest possible price.
When you
analyze those successful home buyers who have the
experience to purchase the home they want for thousands of
dollars below a seller's asking price, some common denominators
emerge. Negotiating skills are important, but there are three
additional key factors that must come into play long before
you ever submit an offer.
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These
Steps Will Help You Save Thousands When You Buy a Home |
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1. Make sure you know what
you want.
As simple as this sounds, many homebuyers
don't have a firm idea in their heads before they go out
searching for a home. In fact, when you go shopping for a place
to live, there are actually two homes competing for your
attention: the one that meets your needs, and the one that
fulfills your desires. Obviously, your goal is to find one home
that does both. But in the real world, this situation doesn't
always occur.
When you're looking at homes, you'll find that
you fall in love with one or another home for entirely different
reasons. Is it better to buy the 4-bedroom home with room for
your family to grow, or the one with the big eat-in kitchen that
romances you with thoughts of big weekend family brunches?
What's more important: a big backyard, or proximity to your
child's school? Far too often people buy a home for the wrong
reasons, and then regret their decision when the home doesn't
meet their needs.
2. Don't shop with stars in
your eyes: satisfy your needs first.
If you're lucky, you'll find a home that does
this and also fulfills your desires. The important thing is to
understand the difference before you get caught up in the
excitement of looking.
3. Find out if your agent
offers a "Buyer Profile System" or "Home-Finder's
Service".
These services take the guesswork out of
finding just the right home that matches your needs. This type
of program will cross-match your criteria with ALL available
homes on the market and supply you with printed information on
an on-going basis. A program like this helps homeowners take off
their rose-colored glasses and affordably move into the home of
their dreams.
To help you develop your home buying strategy,
use this form:
What do I absolutely NEED in my next home:
1. ______________________________
2. ______________________________
3. ______________________________
4. ______________________________
5. ______________________________
What would I absolutely LOVE in my next
home:
1. _______________________________
2. _______________________________
3. _______________________________
4. _______________________________
5. _______________________________
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How Sellers Set Their
Asking Price |
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For you to understand how much to offer for a
home you're interested in, it's important
for you to know how sellers price their homes. We've presented
this information before from the seller's point of view, but it
makes sense to repeat it here to help you understand what
motivates the price sellers ask for.
Here are 4 common strategies you'll start to
recognize when you
begin to view homes:
1. Clearly Overpriced.
Every seller wants to realize the most amount
of money they can for their home, and real
estate agents know this. If more than one agent is competing for
your listing, an easy way to win the battle is to over inflate
the value of your home. This is done far too often, with many
homes that are priced 10-20% over their true market value.
This is not in the seller's best interest,
because in most cases the market won't be fooled. As a result,
the home could languish on the market for months. This creates
problems for the seller in that:
* the home is likely to be labeled as a
"troubled" house by other agents, leading to a lower
than fair market price when an offer is finally made
* the sellers have been greatly
inconvenienced with having to constantly have their home in
"showing" condition... for nothing.
These homes often expire off the market, forcing sellers to go
through the listing process all over again.
Be wary of homes that have been on the market
for a long time. This occurs most often because the seller's
asking price is too high.
2. Somewhat Overpriced.
About 3/4 of the homes on the market are 5-10%
overpriced. These homes will also sit on the market longer than
they should. There is usually one of two factors at play here:
either the seller believes that their home is really worth this
much despite what the market has indicated (after all, there's a
lot of emotion caught up in this issue), OR they've left some
room for negotiating.
3. Priced Correctly at
Market Value.
Some sellers understand that real estate is
part of the capitalistic system of supply and demand and will
carefully and realistically price their homes based on a
thorough analysis of other homes on the market. These
competitively priced homes usually sell within a reasonable
time-frame and very close to the asking price.
4. Priced Below the Fair
Market Value.
Some sellers are motivated by a quick sale.
These homes attract multiple offers and sell fast - usually in a
few days - at, or above, the asking price.
Discuss these sales strategies with your
agent. Together, you'll be able to use this information to
help you structure an offer that will motivate the seller and
potentially save you a lot of money.
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