Posted by Elizabeth Dennis on October 7, 2011 | No Comments
No ever said that buying a home was cheap. In fact, it is one of the largest and most expensive purchases you are ever going to make. Therefore, it is vital to try and save money anyway you can when it comes to purchasing a house. This advice goes for those who are looking at purchasing their first home or their fifth.
One of the easiest ways to save money is to negotiate with the seller. While you don’t want to lowball the seller and offend them, you also don’t want to offer full price, either. One way to get around this is to offer a range rather than a specific number. When making your initial offer, provide a sheet listing the needed repairs, the lower end of comparable sales in the area within the last three months and a pre-approval letter for the amount offered. Never show a pre-approval letter for more than you are offering at that moment. For example, if you are offering $275,000 on a $300,000 house and your pre-approval letter shows you qualify for the full $300,000; guess which amount the seller is going to want.
In additions, once that offer has been accepted and the inspection is complete, use that as a way to further negotiate. Also, look and see about seller contributions to closing costs. These are usually not offensive to the seller and you could save up to 3%.
Another way to save money on the cost of a home is to further reduce your closing costs by closing during the right time of the month. Say, for example, the interest is $50 a day and you close on the fifth of the month. You will have to pay interest from that day until the end of that month which could be well over $1,000. If, however, you close on the 25th of a month, you can reduce this cost to just a few hundred dollars. Don’t, however, close on the very last day of the month in case an extension is needed for a few days.
Finally, be sure to zip your lips and keep your emotions in check when looking for a house. Don’t reveal too much information about yourself as it can be used against you. Also, be sure to conceal any pressure that you might be under to find a house right away. The seller will use that information to drive the price up. In addition, while you do want to show some emotion with each house that you see, you don’t want to get too over excited about any one. This tips your hand as to which house you like the most and can put you in a losing position when it comes to negotiations. Always have another house that you would like just as much if the first one does not work out. Finally, don’t be talked into making an offer. Only do so when you are ready and make that first offer 15% below the asking price. Remember that the first offer will dictate what you pay in the end.
Posted by Elizabeth Dennis on October 4, 2011 | No Comments
Buying a foreclosed home is slightly different from purchasing a regular house. However, it can be worth it for the cheaper price if you don’t mind doing a little extra home repair and having to do a little more research.
One of the first steps in purchasing a foreclosed home it to get preapproved for a mortgage. Many buyers believe they can find the home they want and then arrange the financing, but with a really good deal, the house may not last long enough on the market for payments to be arranged. This preapproval letter will describe how much money you can borrow based on several factors including credit score and income. You will then also be in a much better position to buy because you will know exactly how much you have to spend.
The second step in buying a foreclosed home is to find a broker who specializes in foreclosure sales. Most of the time a buyer can turn to a bank for help in this process. Many lending institutions have one or more brokers whose job is to move the property. An advantage to this situation is that they agent will know exactly what is on the market plus which houses are about to be available. In some places, such as Las Vegas which has a glut of foreclosures on the market, you may not get one on one service, but this is still the way to go.
Next, be sure to study the prices of comparable homes in the market. Be sure to write a competitive offer based on the prices of other homes in the immediate vicinity and those with a similar design and layout. There is really no room for negotiation so make sure that you are offering a price that you can live with and afford.
Keep in mind that when purchasing a bank foreclosure it is going to be sold as is. Therefore, buyers cannot expect to get a discount when it comes to any repairs that must be made. Repairs are almost inevitable when it comes to foreclosed homes so make sure you know people who can assess the damage and let you know how much it will cost to take care of any issues. Be sure to check out any drainage issues or foundation problems and anything else that may crop up.
Overall, buying a foreclosed house is very safe as long as you do your homework before hand. Another important thing to consider is to make sure that title insurance is available on the property. This will come in particularly handy if a house has been wrongly repossessed. As long as the new lender and new owner have title insurance, the former owner can’t get back into the house. If this should happen, the new owner will keep the house while the old one will be compensated with cash. Also, stay away from foreclosure auctions and try to buy directly from the bank that seized the property to make the process more hassle free.
Posted by Elizabeth Dennis on September 27, 2011 | No Comments
If you are in the market for a home, you have more than likely run across a house or two that is being listed as a short sale. A short sale is when the owner is upside down in his or her mortgage and is looking to negotiate with the lender in order to avoid foreclosure. With a short sale, the bank which is also the lender, agrees to accept less money than what is owed on the mortgage. This works out for the bank and the seller. With a short sale, the bank won’t have to repossess the home and go through and expensive and time consuming process and the seller will be able to avoid the credit hit that comes with a foreclosure.
When buying a house that is on a short sale, there are certain things a buyer should know. First, the buyer should get an agent who is familiar with dealing in short sales. An agent with experience in this field will be able to expertly guide you through the transaction and protect the buyer at the same time.
In many ways, buying a short sale property is not all that different from a traditional purchase. However, the buyer must be prepared to enter a waiting game with the bank and come with a large amount of patience. There are a few other differences as well such as the terms of the sale will be subject to the mortgage lender’s approval. Whereas, in a normal transaction, the only party who has to approve the sale is the seller.
Buyers in a short sale should also be aware that the house is going to be sold as is. This means that the buyer will not be able to expect that the price will be lowered if there are any problems found within the house.
When making an offer on a short sale, be prepared to wait. Many banks could take up to several months before even responding to short sale offers. Some experts say that the potential buyer should even give the lender a deadline to reduce the waiting time, however, there is no guarantee that the bank will adhere to any deadlines set forth. One reason for the wait is that the bank may hope that they can get more money. The seller may also hope for more money in a sale as well because they are normally responsible for the difference between the sale price and the amount left on the mortgage.
One advantage to purchasing a short sale house over a foreclosure is the house is usually in much better condition than those that are in foreclosure. This is because the current owners are still in the home where in the case of a foreclosure some owners will trash the house as a way to get back at the lender.
Next, when looking at a short sale, it is generally advisable to keep looking at other houses. This is because of the wait time associated with a short sale.
Finally, do your research and make sure that the current owner is in default. In addition, check to see if a foreclosure has been filed in order to better determine how much you want to offer.
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