Irrespective of the market, homebuyers are always cautious not to get ripped off. However, this only works if you know when you are receiving a fair deal on you intended property. After reading on you will be able to tell if you are getting a good offer or not. This will help you make a good investment with your money.
How to buy a first home
- Researching on recently sold and comparable properties
Basically a comparable property is a property similar in size, amenities and neighborhood to the intended properly you want to buy. You can also get valuable information by just looking at the properties that compare to the same home in terms of prices will be a good way to make decision. Find out whether or not the property is less expensive than other nicer and larger properties or whether it is more expensive than other smaller and less attractive properties. To find this information, you can use the real estate agent. They have accurate and up to date information in this area.
- Look at comparable properties currently in the market
This may require you visiting homes to get a clear picture of the size, amenities and condition and how they compare to the property you intend to buy. Comparing prices will help you know whether it is fair or not. Many reasonable sellers understand the need to price their homes similar to comparables in the market.
- Check out comparables recently on the market but never sold
If the particular home you are considering is similarly priced to other homes taken off the market maybe because they never sold, then chances are that the property is overpriced too. On the other hand, if you get many similar properties in the market then you expect the prices to be lower mostly if the properties are not occupied. Check unsold inventory indexes for additional information on current demand and supply in the housing market. The index measures the length of time it will take for homes in the market to sell based on the current selling rate.
- Market conditions and market appreciation rates
Check out whether prices have been going down or up recently. Most properties in the sellers market will be overpriced and underpriced in the buyers market. All these depend on the current market situation in the real estate boom and the bust curve. Actually, properties in seller market will not be overpriced if market is in upswing and not close to the peak. On the other hand, properties in the buyers market can be overpriced if prices recently began declining. It is not easy seeing the valleys and peaks, mostly are known when they are already history. Bear in mind the impact of mortgage interest rates and job market on state of the economy too.
- Property you want to buy
Are you interested in for sale by owner kind of property? This kind of property is discounted since it does not have the 6% commission for the seller’s agent. These kinds of properties are commonly known as FSBO. They are common for those sellers who are unhappy with the agent’s suggestions and decide to go it alone. In most cases the properties are overpriced.
- Expected appreciation
Know the future prospects of the neighborhood as this greatly impacts on the property prices. Find out if there are any positive planned developments in the area like construction of a major mall, light rail extension, establishing of a new company and prospects of appreciation of home prices in the area. In addition, small developments like addition of more roads or construction of a school are positive signs. Conversely, if there are closures of gas stations, groceries then the property prices will be low in reflection of the developments. This may mean reconsidering your decision to move there. Development of new housing can swing either way and this can impact on your home value.
- Get the opinion of a real estate agent
Real estate agents have information or sense which helps them know the pricing of a property, whether it is underpriced or overpriced or the price is good. You can seek their opinion to be on the safe side.
- Are the prices fair according to you
Find how you feel about the property. If you feel bad about it then you can reconsider your decision. In most cases those who pay overpriced amounts never really get happy with the acquisition.
- Testing the waters
You can do this by offering below listed price. This helps you know the reaction of the seller. There are sellers who list prices based on the lowest expected prices they can take probably because they do not intend to negotiate. There are however those who list higher then the price they expect mostly because they expect negotiations downward. In most cases they want to know if there is someone who can offer a higher price. When the seller accepts the offered price or even counteroffer it is a clear indication that it wasn’t the worth. It also means that you have a chance to get a good deal. Under pricing of a property is also done by some sellers with the view of getting more interested parties to spark an intense bidding. As opposed to eBay sellers do not just get to use the highest bidder but can as well reject the offers if they do not conform to their expectations. There are sellers who will decline working with some buyers who list low prices as a tactic. Listing a low price also has the risk of your being outbid by someone else.
- Use a home appraisal to estimate the current value
Before the home goes under contract the lender will need an appraisal of the home done. This is to secure their financial interests. It is usually to ensure than in the event that you halt mortgage payment then they have a reasonable money back guarantee when the home forecloses. On the other hand, if the appraisal is below offering price it affects your chances of getting a fair deal. In most cases, lenders do not approve the purchase unless the price is brought down by the seller. Home inspection completed after a contract enables you to gauge the offering price. In the event that the home requires many expensive repairs to be made then a negotiation with the seller will be necessary and possibly a discount.
In conclusion, when home shopping you need to understand the pricing of homes to help you make a sound investment and possibly reach a good agreement. It makes it possible for you to make a well informed and confident offer for the home or rather any other property in the market.
Aegis Building Inspections can help you make the right choice when you’re looking to buy a home. Our building inspections and pest inspections will clearly indicate the current state of the property. Our fully licensed and accredited building inspectors and pest inspectors will complete a thorough inspection and then explain their findings with you at the inspection. They will then compile a building inspection report and a pest inspection report that will clearly and precisely document their findings and recommendations. Before you buy a home make sure you get Aegis Building Inspections to carry out a building and pest inspection. Call us today (07) 3103 3393.