10 SECRETS for HOMEBUYERS!

The ultra-low mortgage interest rates have created a large pool of potential buyers, thus driving up home prices for a limited home supply. Here you can read 10 secrets to avoid overpaying for your next house.

1 - KNOW WHAT PRICE YOU CAN AFFORD; GET PREAPPROVED FOR A MORTGAGE
The first step to avoid paying too much for a home is to know what price you can afford. The best way to know for sure is to get preapproved in writing by an actual lender, such as a bank, credit union or mortgage banker.

Mortgage brokers can arrange such preapprovals, but don't be fooled by a mortgage broker's "prequalification letter," which means absolutely nothing. Only after you have a preapproval letter or certificate from an actual lender ready to make you a loan will you know for sure what price house or condo you can afford to buy.

2 - TAKE YOUR TIME BUYING A HOME
The second step to avoid home overpayment is to not be in a hurry. If you're an out-of-town job transferee, it's best to rent for a while until you get to know the community. Better yet, lease a home with an option to buy. Then you won't have to move again if it turns out to be the perfect home for you.

Part of the home quest is to research facts, such as school district quality, crime rates, shopping, transportation, flood areas, and the actual commute time to your job during rush hour.

3 - WORK WITH A TOP-QUALITY BUYER'S AGENT
Ask friends and business associates for recommendations of Buyers agents who sell houses and condos in the vicinity where you want to buy.

However, if the buyer's agent asks you to sign an exclusive representation contract, read it carefully and be sure it doesn't exceed 30 days. If the agent is doing a good job, you can always extend the contract when it expires. Don't be pressured into signing a 90-day contract unless it has an unconditional cancellation clause.

It's best to work with just one buyer's agent at a time. Home shopping can take months, although sometimes the first or second home you inspect is just right for you.

4 - ASK WHY THE SELLER IS SELLING
When you find a house or condo you want to buy, start asking lots of questions before making a purchase offer. Try to find out the true reason the seller is selling because it will influence if you can buy at a bargain price.

For example, if you learn the home is being sold because of a pending foreclosure, your purchase offer with a quick closing will be extremely welcome. Or if you learn the home is being sold due to a divorce, a nice clean purchase offer with few contingency clauses will usually be extremely welcome even if the offer price is a bit low.

5 - INQUIRE HOW MUCH THE SELLER PAID
Another piece of key information, if you want to avoid overpaying, is to find out how much the seller paid for the home. Your buyer's agent can usually obtain this public information easily from the county records. But a quick phone call to a friendly title company might be easier and faster.

If the home has been owned many years, and the seller's cost basis is far below today's market value, you have lots of negotiation room to buy a bargain. However, if the seller purchased within the last few years and has a large mortgage, there probably isn't much room to negotiate on the price.

6 - WHEN YOU FIND A HOME YOU WANT TO BUY, ASK YOUR BUYER'S AGENT TO PREPARE A COMPETITIVE MARKET ANALYSIS (CMA)
Armed with all the information you can obtain, before making a home purchase offer, ask your buyer's agent to prepare a CMA for you. This is the same form that was prepared for the seller when the property was listed for sale.

The CMA form shows (a) recent sales prices of comparable nearby homes, (b) asking prices of similar neighborhood homes now listed for sale, and (c) asking prices of recently expired listings (that were probably overpriced).

Your buyer's agent can then help you arrive at an intelligent purchase offer price so you don't overpay. Remember you can always raise your offer price, but you can't lower it after the seller accepts.

Request a FREE CMA from John today!

7 - AVOID BUYING THE BEST HOUSE OR CONDO IN THE VICINITY
A key step to not overpaying is to avoid purchasing the best house or condo in the area. The reason is the value of over-improved homes is pulled down by the market values of the surrounding lower-priced residences.

By contrast, if you buy the worst home in a great neighborhood, the market value of your home will be pulled up by the sales prices of nearby superior homes.

8 - DISREGARD THE SELLER'S ASKING PRICE
Another name for a home's asking price is the seller's dream price. Rarely do homes sell for their full asking price. However, a few listing agents and their home sellers will deliberately underprice a home, hoping to create a buyer's frenzy, knowing the seller won't sell at the full asking price.

When the asking price isn't justified by your CMA, you'll know the home is overpriced. If the asking price is far too low, find out why before making a purchase offer. When two or more buyers get caught in a buyer frenzy, the buyer will usually overpay, and the seller wins from the auction.

9 - IF YOU WANT TO PROFIT FROM YOUR HOME PURCHASE, BUY A FIXER-UPPER HOUSE BELOW ITS MARKET VALUE
The best way to profit from a home purchase is to buy a fixer-upper home far below its market value and then fix it up to raise its market value by more than the improvements cost.

But fix-up work isn't what most buyers seek. Beware of the potential pitfalls, such as unexpected repair costs. However, fixer-upper houses and condos can be extremely profitable if you don't overpay.

10 - TO AVOID OVERPAYING, ASK YOURSELF, "IF I HAVE TO SELL THIS HOME WITHIN A YEAR, CAN I GET MY MONEY OUT?"
When making a purchase offer, ask yourself if you will be able to sell the home within a year for at least as much as you paid. This is the ultimate test to avoid overpaying.

Every home has a range of values. For example, where neighborhood homes sell for between $190,000 and $210,000, if you pay $210,000 for a comparable home, you are probably overpaying. But if you buy for $190,000 where similar homes have recently sold for up to $210,000, you probably will be able to easily resell for at least your purchase price if you must.

CONCLUSION:
To avoid overpaying for your next house or condo, follow the 10 rules above. But please be aware no home is perfect. Even brand-new houses have their problems. Buying a home is a series of compromises, the most important of which is to negotiate the purchase price at or below market value to avoid overpaying.

The Service you Deserve!

I hope this website is giving you a helpful glimpse into our Bend Oregon real estate market and the services I provide. With dozens of pages about relocating to Central Oregon, plus the easiest way to search the MLS, my goal is to help make your next move a complete success.

Bend Home Sales, LLC
John Melton
Broker / Consultant

Direct: 541.350.6500
Email: John Melton

Disclaimer: All information provided is deemed reliable but is
not guaranteed and should be independently verified.