House hunting is not only perhaps the priciest endeavor you will ever undertake, but also one of the most complex.
In this post, learn four essential price points to expect that will help you narrow down your search and simplify your house hunting process.
Price Point #1: First, sit down with your mortgage lender, then look for a home.
If you arrange for your loan funding first, you will have a much better idea of how much home you can actually afford given your credit score, downpayment amount, current debt burden, industry interest rates and other variable factors.
By arranging for your funding in advance, you avoid wasting valuable time looking at homes you cannot afford. You can also plan far in advance for selling your existing home (if applicable). Knowing how much funding you qualify for can tell you what your existing home’s asking price needs to be and how much leeway, if any, you have there.
Price Point #2: Next, know what your options are if your existing home sells early….or doesn’t sell even after you close on your new home.
Perhaps the most challenging aspect of the new home buying experience is navigating the sale of one property and the purchase of another. Of course, the ideal scenario is to sell one property and buy another, with an immediate move-out/move-in to follow.
But for too many home seekers, the process is a lot more cumbersome. So be prepared in advance with some cash to tide you over and an alternate plan (like renting your current house) if you need to.
Price Point #3: Be prepared to add value to your offer in unusual ways.
Whether you are working to acquire a house in a real estate market that is competitive or slow, you want to be ready to add value to your offer in more ways than just cash.
For example, appliances can be part of the bargaining process, as can home repairs, yard upgrades and clean-up. If you really want a property, rather than offer too much or lowball, talk with the seller to see what else might be on the table to sweeten the deal.
Price Point #4: When the price drops, so does your negotiating power.
Finally, homes with price reductions are often surprisingly resistant to further negotiations. Reason being, the seller is likely already near their bottom-line price. So when you lower your own price point, be prepared to forego some of your negotiating power.
By seeking your funding first, knowing how to negotiate creatively and keeping a Plan B in your back pocket for an existing property, you will be better prepared for the house hunting process.