If you are a bargain-hunter who believes only chumps pay full price, the thought of purchasing ABOVE asking price (something that happens quite frequently here in the Greater Boston area) can be painful. You're used to shopping around and making a slow and thoughtful decision about what to buy and for how much—why would a home purchase be any different? There are certainly ways to bring fiscal savvy to the process of buying a home without just submitting a lowball offer. I’ve pulled together four legitimate strategies you can use to get that bargain you’re hunting for:
Put down at least 20%
It's not exactly groundbreaking news, but it’s hard to beat the benefits of offering a substantial down payment (or being a cash buyer). By putting at least 20% down, you can avoid having to pay additional mortgage insurance on your loan. This will also help you stand out against other buyers offering a higher purchase price but who have a shakier pre-approval or mortgage contingency.
Find the seller's motivation
Let’s be clear: price is king in this market, but if you can try to understand the sellers' specific needs and situation you can hedge your bets a bit. Do they need to relocate for a new job immediately? Move up your P&S and closing dates. Do they want to stay put through the school year for their kids? Let them stay in the home after the sale—in exchange, of course, for a reduction in price. Always have your agent to speak with the listing agent to find out what terms might make the sellers find the silver lining in a lower offer price.
Find a lackluster kitchen
An outdated or ugly kitchen can drive buyers away, causing a home to sit on the market for months and sell for less than it’s worth. Think about the size and layout, and whether or not there are things you can work with—then consider the things you can easily fix. For example: you can repaint wood cabinets, replace the faucet, add distinctive cabinet pulls, and redo the floors and counters for a relatively small investment.
Look out for price reductions
If a listing has been sitting on the market without interest, the sellers might be itching to get it under agreement, especially if the price has already been reduced. Your agent should be able to help you identify these opportunities, and once a price reduction has occurred, the listing will likely fetch even less than the reduced price.
What other approaches have helped you seal the seal under market price?