Four Simple Strategies to Buy Your Dream Home at 20% to 30% Below Market
Traditionally, home ownership has represented a huge chunk of the American Dream. Wedged between “Get married” and “Have children” on the list of things to do, the home ownership ethos is important for Americans, but it’s not at all easy. It’s definitely not as easy as it should be to buy your dream home.
For each state, county and city in the U.S., residents have access to an organized, searchable (likely all digital) catalog of property records. That’s fantastic! Where I come from, there’s nothing like that in existence, which makes buying and selling property difficult.
Let me make the home buying process simple for you: If you can enter and record an agreement, that’s really all that’s needed to transfer ownership of any property.
We tend to think of buying in terms of what we can afford per month instead of the total amount we are paying for a home. Well, your purchase price is just as important as your monthly payments. You should absolutely shop for a house like you would shop for a car – with discretion.
Three Simple Strategies to Make Money Buying Your Dream Home
#1. Get out of the bidding war. If you’re currently on the hunt for a new home at a great price, you are going to find yourself in a fight to the finish with other home buyers who are also looking for a new home at a great price. So, how do you set yourself apart and land the deal to buy the home of your dreams? Hang on to your britches: You walk away from the bidding war. Any bidding war between buyers drives up the price of a house. As the seller, you want a bidding war. As a buyer, you don’t. Every time you make a counter offer, you eat away a little bit more of the home’s equity until finally, you’re overpaying for a home. Don’t be that guy. Don’t be the overpaying for a home guy.
#2. Identify what’s important. More often than not when buyers start scouring the market for a new primary residence, they look for the dream they see in their mind’s eye. They want the 4 bedrooms, the in-law suite, a three-car garage, room for the boat, a huge, fenced-in yard for the kids or puppies, great schools, a low crime index and a high walkability rating. We all want that or some variation thereof. As long as you’re looking for the same things I’m looking for, you can look forward to those bidding wars I told you to get out of. Figure out which elements are non-negotiable. Figure out which elements are negotiable and use this criteria to find a house that fulfills your list of non-negotiables.
#3. Get away from tradition. In this business, one telltale sign that you are paying too much for a property is if you go about acquiring it through traditional means. That means checking real estate websites, talking to agents, cruising for For Sale signs planted in front yards by enthusiastic agents. You’re going to pay too much. I guarantee you that within close proximity of the house that has you entrenched in a bidding war is another that would be just as great if somebody actually gave a damn about it. These “invisible” houses are the ones agents typically don’t show. Agents go for quick sells – homes with curb appeal, homes that have been staged and that smell like cookies. Agents earn greater commissions on bidding-war homes. So if you want to buy a house below market, don’t look for agents who are trying to sell at or above market.
#4. Look for “invisible” houses. Stop looking for houses that are perfect in every way and start looking for houses that need a little work. It may be cheaper to update a “vintage” bathroom than it is to buy a home that already has a new bathroom. Most homeowners are on the prowl for perfection. Step away from the crowd and look for something you can put your hands on yourself. Sure, it may take you a several weeks to update a bathroom or kitchen, but you will walk into your house with equity that will increase once the renovation is done.
You want to know how to get the best deal on your house? Follow these three strategies for smart home shopping and I guarantee you will come away from your deal with equity, which is money in your pocket. You can see this strategy in action by reviewing Jesse and Cynthia’s story.