Finding Real Estate Deals
Unlike stocks, bonds or precious metals, similar types of real estate can vary widely in price based on a number of factors. If you're interested in finding good deals on real estate, it's important to know what these factors are, and use them to your advantage.
One of the main factors is the concept of a Buyer's Market versus a Seller's Market. As a potential buyer, you want to have all the advantages on your side. Study the market trends in the area you're interested in. If a major employer in the area is laying off workers, the number of homes in that particular market may suddenly increase, providing opportunities for savvy buyers who've had their ears to the newswires.
Catching a Wave
Those who research market trends may find that home prices in a certain neighborhood are steadily rising. Perhaps the area has become fashionable, maybe a new transit line or roadway has made it more convenient for commuters. In this scenario, buyers who act quickly can often land a prize property before area sellers realize that their neighborhood has become hot. What may seem like a market-priced purchase now can, several months later, actually have been a bargain!
For Better, For Worse, Foreclosure
Many buyers go into the home buying market with one thing in mind: get the best deal possible. To do this, they restrict their searches to “distressed” properties. This can mean a number of things, such as:
- Fixer-uppers that need a significant amount of work
- Foreclosures
- Power of sales.
The latter are better choices for those who don't have the home renovation skills needed to cheaply rescue a truly distressed home. The key to buying a foreclosed house is knowing that banks and financial institutions are not, strictly speaking, in the real estate business. Their main interest is in moving the property as soon as possible to get it off their books and recover some portion of their financing given to the original buyer. This creates an excellent opportunity for a buyer who can step in to take the property off the lending institution's hands.
Commission Accomplished
The average homebuyer wants a good deal, of course, but they also want the house they buy to be a home. This doesn't necessarily mean that they'll have to pay the seller's asking price. If there is little or no immediate competition for the home, then it may be possible to enlist the real estate agent in an effort to close the deal quickly. If the seller won't budge from the asking price, perhaps the realtor will reduce their commission.
The result could be that the seller gets what they want, the realtor benefits from a quick sale, and you end up paying less. Being a savvy buyer in this manner can also extend to the appraisal and inspection process. Don't skimp on the home inspection—some minor but expensive problems may turn up that can be used as a bargaining chip to get the seller to lower their price. Of course, you'll pay to fix those problems, but later...after you've moved in.
Deal Me In
All in all, it can be said that being a smart, patient and steadfast buyer can pay off where it counts the most. It's not impossible to find a deal on a new home, even in tight markets. Going into the process with the determination to save money can be a self-fulfilling prophecy. Do a little digging...After all, that's how gold is found!
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