Buying a home is one of the most significant investments most of us will ever make. The good news is there are several useful tips and strategies buyers can use to help stretch their budget and avoid overspending. From establishing your wants and needs to choosing the right REALTOR® and negotiating with sellers, here are our top 10 tips for avoiding paying too much when buying a home.
Tip 1: Establish Your Wants and Needs
If you’re trying to save money, it’s important to determine your wants and needs before buying a home. If you don't know what you’re looking for, you’re more likely to make impulsive decisions and spend unnecessary money on your purchase.
Another reason to establish your wants and needs is to avoid expensive renovations and upgrades. You can identify homes that satisfy your criteria of basic needs first, such as square footage and number of bedrooms, then your wants. This can prevent you from paying for costly upgrades later on.
See also: Your Needs Vs. Wants Worksheet
Tip 2: Get Pre-Approved Before You Start Your New Home Search
Firstly, getting pre-approved before starting your new home search will give you a better idea of what homes are within your price range. When you know how much you can afford, you can narrow your search to homes within your budget, saving you time and resources in the long run.
Secondly, getting pre-approved can help you get a leg up on the competition when hitting the real estate market. In a seller’s market especially, it’s common for there to be multiple offers on a single home. When you have a pre-approval, you show the seller that you’re a serious buyer with financing already in place. This may give you an edge over others who have not yet taken this step.
Finally, going through the pre-approval process can help you identify any potential issues with your credit history that may need to be addressed before you begin your home search. By doing this early on, you have time to make any necessary improvements to your credit score, which can help you get a better interest rate and ultimately save you thousands of dollars over the life of your mortgage.
In short, getting pre-approved for a mortgage is an essential step in the home-buying process. It will give you a clear understanding of your budget, help you compete in a competitive market, and allow you to address any financial issues early on.
Tip 3: Choose the Right REALTOR® For the Job
Choosing a reliable REALTOR® is essential if you want to save money when buying a home.
Real estate agents have access to a wealth of knowledge the average homebuyer does not. They have comprehensive listings and market data, giving them insights into the current trends of the Edmonton real estate market. They can use this information to help you find the right home that meets your needs and budget while also negotiating on your behalf to ensure the best deal possible.
A good REALTOR® will also be able to help you navigate the legalities of complex paperwork while providing helpful advice on financing options and referrals to other industry professionals - this can save you time and money, as they can recommend trusted providers who can help you get the right mortgage, insurance, and other services you may need.
Tip 4: Research Your Neighbourhood
Researching the neighbourhood can save you money as it will make you keenly aware of the area’s property values and market rates. This can give the advantage when it comes to negotiating with sellers while being able to identify when a home is overpriced.
Moreover, investigating the community can reveal potential concerns or issues that may affect the property’s value down the road, such as construction, crime rates, unpleasant sights or sounds, etc. These problems may decrease your home’s resale value over time.
So, before jumping into a home purchase, make sure to take the time to do your homework. It will ultimately save you money and give you the confidence to invest in a home you can enjoy for years to come.
Tip 5: Keep Your Emotions at Bay
Buying a home requires an objective mindset with a focus on financial goals if you want to save money. As emotions can get in the way of decision-making and lead to costly mistakes, keeping your emotions at bay when buying a home is instrumental.
Keeping your emotions in check helps you evaluate properties objectively. For example, the heat of the moment may have you believe that a particular home is perfect for you even though it’s not within your budget. Additionally, negotiating a fair price requires keeping things on an even keel. But don't worry. As a negotiation expert, your REALTOR® will help guide you through this tricky process.
Tip 6: Watch For Red Flags
Many people fall in love with a house and rush to make an offer, only to regret it later. That’s why it’s critical to watch for red flags when viewing homes, which can save you time, money, and stress in the long term.
One of the biggest red flags to watch out for is poor maintenance and repairs. If you notice the house is not well-maintained, has a leaky roof, or has structural damage, it can turn into an expensive nightmare. You could spend a lot of money on repairs and renovations, which could quickly exceed your original budget.
Another red flag is the age of the home and its systems. An old house with outdated plumbing, electrical systems, and appliances could be an early warning sign of future maintenance and repair issues.
Tip 7: Hire a Home Inspector
Hiring a professional home inspector is yet another important money-saving step in the home-buying process.
Home inspectors are experts in identifying potential problems with a property that may not be visible. They can detect issues such as hidden leaks, roofing problems, electrical and plumbing issues, and structural defects that may otherwise go unnoticed.
With a detailed home inspection report, you now have room to negotiate with the seller or reconsider your purchase altogether if these items are too significant to fix. A home inspection can also help you plan for future expenses by giving you an idea of any immediate or upcoming repairs that must be addressed.
During the inspection process, your inspector will review the following:
• Foundation (slab, crawlspace, basement, etc.)
• Electrical, heating and plumbing systems
• Floors, walls and ceilings
• Siding and trim
• Porches, patios and decks
• Property drainage
Tip 8: Don’t Be Afraid to Negotiate
Negotiation is an essential skill when making a real estate purchase, especially when you want to maximize your savings. A savvy negotiator can save thousands, if not tens of thousands, of dollars on their purchase.
One of the reasons you need to negotiate when buying a home is that the real estate market is constantly changing and can be highly competitive. As a result, when supply is low and demand is high, home prices tend to be high too. But a good negotiator (aka your REALTOR®) can help you leverage the competition and get the best possible deal. Your real estate agent can also assist you with researching market trends and comparable sales to provide you with a better understanding of the current home prices.
Another reason why negotiation is crucial is that you need to know the value of the property you want to buy. Sellers often price their homes higher than their actual market value in anticipation of negotiation, so it’s essential to do your research to determine what the home is truly worth. When you know the market value, you can make an informed offer and negotiate more effectively.
In summary, negotiating is a must to save money when buying a home. It will take some research, effort, and skill, but the payoff can be significant in the end. Reaching a great deal and knowing that you obtained the best possible value for your investment will give you the confidence you need to make such a significant purchase.
Tip 9: Avoid a Bidding War
A bidding war occurs when multiple parties make competitive offers on a property that is in high demand. The result is often a higher sales price than what the home is worth or what you initially intended to pay.
It’s best to avoid bidding wars altogether if you want to save money - and one of the simplest ways is to be prepared. Know your financial limits and what you are willing to pay for a home. Stick to your budget, and don’t let the emotions of buying a home cloud your judgment.
Another way to avoid a bidding war is to look for homes that aren’t in high demand. Consider looking in up-and-coming areas or at homes needing some work, but you can (affordably) fix up yourself. These types of homes may have a lower price point, fewer interested buyers, and give you more bargaining power to negotiate.
If you do find yourself part of a bidding war, it’s important not to get caught up in the moment. Instead, stick to your budget and be ready to walk away if the price exceeds what you’re willing to pay.
Tip 10: Be Prepared for Hidden Costs
While many people do their best to research and budget for the various costs associated with buying a home, hidden expenses often catch them off guard. If you want to save money when purchasing a home, you must be prepared for these costs.
For starters, closing costs can add up quickly, often totalling 2-5% of the home's overall purchase price. In addition to the standard charges, which include things like appraisals and title fees, there may also be additional fees for things like taxes and insurance.
Another hidden cost to consider when buying a home is maintenance and repairs. Even if you find a home in good condition, there will likely be some minor changes or updates that you’ll want to make once you move in.
Last but not least, don’t forget to include the cost of moving in your calculations. Whether you hire a moving company or do it yourself, there will be expenses like packing materials, transportation, and cleaning fees that you’ll need to consider.
Overall, being prepared for hidden costs is crucial if you want to save money when buying a home. Do your research, budget carefully, and plan ahead to avoid any surprises along the way.
Photo credits: shutterstock.comPosted by Terry Paranych on