Avoid Overpaying For A House

Avoid Overpaying For A House


Whetherthey’re buying designer jeans or a new house, no one wants tosuffer from buyer’s remorse.

Thereare lots of potential complications that can cause you to overpay fora house, from being caught up in open-house frenzy to skipping a homeinspection to “save” yourself money. But just as there areobstacles to getting the best deal, there are also tried-and-truestrategies to get a fair price for a home, like getting a privateshowing of that homefor sale in Philadelphia, PA,instead of (or in addition to) attending the openhouse.

Hereare seven more tips to calculate accurate house value and avoidoverpaying for your home.

1.Define “fair price”

Beforewe get into the nitty-gritty of landing the best deal, it’s fair topoint out that sometimes it’s worth payinga bit more if that means you can score a house that perfectly suitsyour needs. Ask yourself: Is it really worth losing your dream homeover a few thousand dollars? It’s a call only you can make, but theanswer just might be no.

2.Know the comps

Oneof the best ways to know the value of a home is to find out whatsimilar homes in the area recently sold for, known as “comps,” or“comparable sales.” Looking at what other homes in theneighborhood are listed for helps too. But you usually get the mostaccurate picture of local home values by looking at the price someoneactually paid. “Ideally, you’ll be able to find at least threecomparable properties that have sold recently in the sameneighborhood,” says Sam Heskel, CEO of Nadlan Valuation, a NewYork, NY, appraisal company. A realestate agent shouldbe able to track down this information for you.

3.Include an appraisal contingency

Typically,when you buy a house, you put in an offer, and if the seller acceptsit, your lender orders an appraisal. But if the appraisalcomes in lower than the price you agreed to pay,you’ll have some decisions to make. And you’ll have more optionsif you’ve included an appraisalcontingency inyour contract. “An appraisal contingency typically stipulates thatthe appraisal must come in at 5% or 10% of the sale price, orsometimes even at or above the sale price,” says Heskel. “If thebank’s appraiser says you’re overpaying by $20,000, why shouldyou pay that price?” You can try to negotiate with the seller tomeet you in the middle, but as long as you can afford to come up withthe difference — because your lender probably won’t agree to lendmore than a home is worth — it’s your call to determine whetheryou’re overpaying for the property.

4.Be your own investigative journalist

Whenyou’re house-hunting, Googlecan be your best friend.Why? Because you want to know before you buy whether something’sgoing on in the neighborhood that could affect property values. Maybea high-density development is coming, or an increase in homeowners’association orcondo fees is on the horizon. “Buyers should do their own legworkto talk to city hall, the police department, the tax department,schools, neighbors, neighborhood groups, etc.,” says StaceyAlcorn,CEO of LAER Realty Partners in Massachusetts.

5.Work with a buyer’s agent

Yes,you can browse listingson Trulia,but don’t let that keep you from hiringa real estate agent.A good agent will know of properties that are about to hit the market(or might sell before the MLS listing goes live!) plus have expansiveknowledge of your market, which can be a huge help if they suggestneighborhoods you haven’t considered that are a great fit for yourneeds.

Intoday’s market with tight inventory, almost half of my deals arecompleted and sold off-market before they even hit the open market,”says RyanPertile,a Minneapolis, MN, agent. “So home buyers need to find and hire areal estate expert in their desired neighborhood.”

Besidesproviding you with a comparative market analysis, an in-depth look athouse values, arock star agent “knowsthe current condition of the market and what is a fair price,”says PhilliaKim Downs,a New York, NY, agent. “Based on the length of time the propertyhas been on the market, whether it’s a buyer’s or seller’smarket, and whether there’s a bidding war, an agent should be ableto guide you effectively with strategy to make sure you get the mostbang for your buck.”

6.Comparison-shop for your mortgage

Youprobably comparison-shop before buying furniture or even gas for yourcar. But almost half of consumers don’t shop around for theirmortgage, according to the ConsumerFinancial Protection Bureau.And that’s a mistake. Lenders charge different fees, and they offervarious interest rates, sometimes varying by half a percent or more.That could affect your payment to the tune of $60 a month.

7.Don’t get sucked into a bidding war

Ifyou know you’re in a seller’smarket (littlesupply with lots of demand), making an offer that’s below theasking price probably won’t get you the house — and it might putyou in a bidding war situation. Typically, it’s better to bepreapproved with a mortgage loan and make a strong offer right offthe bat. Entering a bidding war can become emotional. “If youreally, really want the property, your logical, rational perceptionscan get influenced,” says Downs. Know your limit, and walk away ifthe price goes higher. There are always other homes that come on themarket.

Source:TRULIA'SBLOG \REALESTATE 101 LauraAgadoni |January 14, 2016

Blogsubmitted by: Cyndi Cobb of The Real Estate Market Place –Servicingthe Greater Fort Hood and surrounding areas which includes:Killeen,Harker Heights, Temple, Belton, Copperas Cove, Lampasas,Kempner, andNolanville. Feel free to call if you have any questions regardingCentral Texas Real Estate.

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Phone: 512-564-0381
Dated: February 15th 2016
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