Determine Your Offer
A friend of mine is looking to buy a house for the first time. Zero experience with all this Real Estate business so she says everything seems very scary, especially when it comes to figuring out how to actually buy the house - it's not like getting a piece of furniture - you have to negotiate, compare, contrast; It's complicated.
Check Sales History
If you ask a Real Estate expert, the first thing you do when consider buying a house is check other sales as well as the history of sales in the neighborhood you're considering:
What were the prices like a year ago? How much would a house comparable to yours cost? Your Real Estate agent will have records of all the past sales -- get a hold of as many as you can to get an idea about the price of your property. Do keep in mind though that sales that are much older than a year may no longer be relevant so try to get as most recent sales as possible. The changes in the economy and the real estate market are simply to unpredictable in the long run.
Second of all look for properties that are similar to yours - same lot size, number of bedrooms, square footage, additional features. If you're buying a house in the country see how much houses like yours sell for, in that particular area. If the property you're looking at has certain extra features such as swimming pool or landscaped garden remember to get quotes on these features to adjust your comparisons.
Finally, see if there are any houses in your neighborhood that have sold recently. The area where your house is located is also something that is taken into consideration when the house value is established. For example, a house to a park or church or a hospital may have a different price than a similar house on the edge of town, located by the cemetery. The average of the neighborhood matters as well - naturally the areas with old, Victorian houses and heritage homes will be considered desirable, however if an area is not maintained properly the price will be affected.
The sale prices that you will obtain through your research should be similar to one another - the average should give you some sort of idea as to what your house should cost you.
Inspection, Market And Condition
Once you have an idea about the price you should order an inspection of your property. This can be ordered through your Real Estate agent although you need to remind yourself that it is in your agent's best interest to make sure the house sells and an agent hired through the Real Estate office may be less reliable an inspector you hire independently. An inspection will tell you all you need to know about any possible future repairs as well as what you should demand and expect from a house.
Your house will not fail or pass the inspection - the inspection is simply there to give you an idea as to what hidden costs and unexpected issues are to be expected once a sale goes through. You'll have a good chance of winning any negotiations if you have a good rapport with the sellers. Ask your Real Estate agent if a meeting can be arranged so that you can talk about renegotiations in a cooperative manner - you want to buy, they want to sell; Make sure everyone is on the same page.
Additionally, once the inspection is completed you can talk to your Real Estate agent about possible negotiations about your property. For example, if there's an indication that there will be future problems with a water supply - say you're in the country and only have access to a septic tank; you may want to argue the price. You can also put conditions on your contract once you set the offer such as that the new septic tank is installed before the sale is complete.
Think about the market. Did you know that when there's a sales boom at premium prices there's something known as sellers market which is the opposite to buyers market which is what happens when homes are selling slower and at discounted prices.
You need to consider some of the factors such as the amount of time your house has been on the market and how long does it take for similar places to sell in the same area. Naturally, if the hose you're after has been on the market for an unusually long time you may want to make sure you know exactly why it's been on the market for that long.
Check with your Real Estate agent to see if there are any conditions on the house, from the seller's point of view. A friend decided to buy a house and contacted his agent before starting negotiations to enquire further about the house. It turned out that the house was only to be sold if the couple who put it up on the market would get the house they were after. They didn't get the house and there was a lot unnecessary heartbreak and confusion.
When you make your offer don't worry about making an offer that is lower than ninety percent of the actual asking price. A very low offer might be rejected immediately but a reasonable offer should generate at least a counter-offer from the sellers. The counter-offer may be very close to your offer.
Before deciding on the offer price make sure you have all the facts. Don't just spend money on a formal market appraisal. Get a second opinion if you must -- the best way to figure out the value of your house is to get a couple comparative market analyses from few different agents specializing in your area. These agents take recent sales data and your house's characteristics and also will consider your neighborhood into the price equation.
Common-sense but very, very important: remember, when you choose to work with when buying your home, pick one with a track record of local sales and a good marketing plan.
When Buying A House
You've been looking for houses that are within your buying range, naturally and you're willing to spend the top amount and perhaps are still prepared to spend a little extra on repairs and moving. Construct a budget - figure out how much shorter you'll be if you end up buying a house closer to your top limit. Will you be able to afford to buy some extra furniture? Will you be able to pay for a lawn mower, a new driveway, a fence or a hedge (it is very expensive to plant grown trees)? What about your new house insurance? Make sure you get to know your life-as-a-house-owner really, really well before you determine your offer price. It helps to plan out your strategy in advance. Find out as much about the sellers situation as you can. Be prepared to make a resolution to walk away from the property if you have to really overpay to buy it.
If you have to negotiate the price make sure you plan your negotiation strategy; that way you'll be able to give up something that you're after in exchange for the seller giving you something else that you want. If you know that the sellers - and let's pretend you did meet them when you were negotiating things after the inspection -- would love to have a short close on the house, let's say they're moving. Negotiate by offering a 30- or ninety-day close and a price that is lower than the top price you will be able to pay. If the sellers give you a counter-offer with the condition of a 30-day close ask that the price be lowered and accept the condition.
You need to have a bargaining weapon until there's a determining point in your negotiation. Sure, you may be considering paying the seller's price but do it so under the conditions that the seller fulfills all of your conditions as well, such as the house repair or land survey.
A risky, yet often very effective method is to use the either or approach which when you give the seller two options so that they're locked into deciding. The seller wants to close in 60 days; you prefer 120 or 150. If the home is listed for $400,000, you might offer to pay $400,000 with a 150-day close, or $394,000 with a 30-day close.
It helps to plan out your negotiation strategy in advance. Find out as much about the sellers situation as you can. Determine the highest price youre willing to pay. Make a pact with yourself to walk away from the property if you have to significantly overpay to get it.
You must know what you're willing to pay for your house; don't ask your agent. However, do tell your agent if you're willing to pay the exact market value or more for your house if you are afraid of losing it. You need to know that most good agents - and you have a good agent because you're researched enough - will try to do biding on your house and try to get you a house that is below the market value since they probably will want you to remain with them as a future client. In other words, when you want a deal tell your agent that, but if you want only this and only this particular house let your agent know as well. That way he'll be ready to apply whatever negotiating tactics are the best in the situation.