If there’s one financial move that you should take the time to get right, it’s the purchase of a house. As the biggest investment you will ever make in your life, a home purchase can take you a good way towards important life goals, or, if you choose poorly, drag down your standard of living.
There are two parts to making a good, well-thought-out purchase — finding the right home, and getting it down to a good price. It takes patience with the due diligence process get both parts right.
Finding a home that works for you
Many people considering a home to buy take a fairly predictable route.
• They go after properties that catch their fancy right now, rather than something that will make them happy for decades.
• They focus on just the features of each house that the real estate agents promote.
• They aim no higher than a home that they can afford on their income today.
• They rule out most trade-offs even when they let them get their hands on bigger and better deals.
All of this is a recipe for misery.
When you look for a home to buy, the first thing that you should do is to think of what you’ll be able to afford to pay five years from now, when you begin to make more money. Until then, you may be able to tap your savings to make up for the drain on your income brought about by extra-large payments. As long as you believe that your income will rise in no more than a few years, and that your industry is stable enough to ensure continued employment, it’s a good move.
When real estate agents show prospective buyers a home, their aim to try to draw their attention away from the negatives — narrow hallways, cheap doors and windows, a bathroom in need of work and so on. They often succeed. It’s important to turn off the commentary.
Look for potential for future extensions and remodels, suitability for a home business, or anything else that you may need. Your aim should be to buy for the future, as well as for now.
It makes a great deal of sense to look for homes that others may find unacceptable for various reasons. Homes right next to schools tend to be cheaper, for instance, because of the noise. Buyers also tend to reject homes with no garden. If you can accept trade-offs, you get to save a lot of money.
Working the price down
Many imagine that haggling is undignified activity that is all about pleading for understanding. It’s nothing like it, however. It’s mostly about timing and negotiating .
One of your top negotiating strategies is to let on very little about how desirable you find a house. Whether you’ve fallen in love with it or not, it’s important to be cool, learn what the asking price is, and go your way. Then, talk to your agent, and study the property market for the prices of similar places. You want to find out if the market is slow for such properties. If it is, there could be some price elasticity.
Some buyers try to play mind games with sellers by getting friends to put in very low initial offers. The idea is to get the sellers to believe that their home isn’t worth much. This isn’t fair, or even honest, however.
If you really do want to look for homes that sellers are likely to be flexible with, you should go with ones that have been on the market for a while and seen little activity. It can also help to research Internet forums for sellers looking for a quick sale for some reason (a need to move overseas, is a commonly spoken of). Finding such sellers can take considerable online research, but many buyers put in the work necessary.
If you decide on a property that seems to be in demand, you can still find an advantage over the competition by offering to pay cash. The promise of a quick sale tends to be very attractive to sellers. They prefer such buyers over ones who need a mortgage.
According to TaylorsEstateAgents.co.uk of St. Albans, one important piece of advice involves the practice of paying down a holding deposit, non-refundable money that you leave with the seller to prove the earnestness of your intent.
Paying a seller a holding deposit may make you believe that you have the deal in the bag. Legally, however, there is nothing requiring the seller to sell to you. If someone else makes a better offer, they can always forfeit the deposit, and sell. This kind of practice is known as gazumping. It is usually not a good idea to go with a seller who requires a substantial holding deposit.
With some creative thinking, the house that you fancy can be yours at a price that you are comfortable with.
Naomi Barry works as an estate agent, a role she has been in for slightly more years than she would care to admit! She writes about the real estate industry and the property market in her articles.