Are you trying to find a deal on real estate? With the housing market so hot these days (see the national housing trend below), it can seem almost impossible to find a deal on real estate, but no matter how hot the market may be, there are still plenty of ways to find yourself a deal.
Some people walk through a house and everything has to be pristine for them to even consider purchasing it. This is most certainly NOT how to find a deal on real estate. So how can almost anyone find themselves a deal? Check out these 10 methods and you’ll likely save thousands of dollars on your next home purchase.
#1. Find a Quality Realtor
As a buyer, you can hire yourself a realtor and pay absolutely nothing for their services. This is because their commissions always come from the seller (both the seller’s agent and the buyer’s agent split the commissions from the seller when their home is sold). But, just because your realtor is more or less “free” for you to use, this doesn’t mean that you should just settle for the first realtor that you come across.
Instead, ask your friends who they have hired for a realtor and see if they’ve been satisfied. Beyond this, check their status on sites like Zillow.com to see if they’ve been reviewed and how active they are in the real estate world. If they make minimal sales and have no reviews, you might need to move on.
If you’re trying to find a deal on real estate, you want to be sure that your realtor is constantly in the game and can find homes without relying on the MLS listings. If they are networking and are in constant contact with other realtors, they’re likely the ones that will find you your deal.
#2. Watch the Listings Every Day
Have your realtor set you up on the MLS mailing list. They can enter in your criteria of price, bedrooms, and bathrooms, and have those listings sent to you automatically when they come on the market. Just watch your phone for new emails and you could be one of the first to jump on that property that’s perfect for you.
#3. Check the Price Drops
There are some homes that are better than any others and their owners know it, which means that their price holds firm for many days and maybe even months. Eventually, they get their asking price and happily accept.
There are others though that don’t have the luxury of setting a price and waiting for that perfect buyer to come along months down the road. They might be hard up for money, they might have moved out of state, or maybe they’re heirs to the estate and just want to sell the property quickly so they can divvy up their inheritance.
Whatever the case may be, if you see one price drop (or more), then you may have found yourself a potential deal.
Liz and I recently found a house that was initially listed for $120,000. After 10 days, the price dropped to $110,000. After another 15 days, the price dropped to just $95,000! This family was obviously urgent to sell. With the price dropping that fast, they might even accept an offer of $80,000, even though the house is probably worth over $100,000.
find a deal on real estate
If you want to find a deal on real estate, keep your eye on the price drops.
find a deal on real estate#4. Ugly Houses, but Good Bones
As I stated early on in this post, there are some people that are looking for a home that’s completely done and move in ready. They’ll never find a deal this way. If you want to find a deal on real estate, then you’ll need to have some vision. The ideal house is the one that has a solid roof, good siding, and a firm foundation. The rest of the house might be painted pink and have pee stained carpet, but you know what? That’s replaceable and fairly inexpensive. By rolling up your sleeves and adding some paint and carpet, you could probably add $20,000 of value to the house for about $2,000. If you want to find a deal on real estate, find the ugly houses that have good bones. You can’t go wrong with them.
#5. Spot Foreclosures, HUDs, and Short Sales
Foreclosures, HUD homes, and Short Sales are all basically the property of the bank, and this might mean a deal for you. Don’t be fooled though, not all bank owned homes are deals. Some are priced according to the market if the bank doesn’t mind holding onto the property for a while (and some really don’t mind, so long as it earns them some extra money by doing so).
What you want to know is if the bank is willing to give you a deal.
Foreclosures are hit or miss. They might be a deal or they might not be. If the house is 200 miles from the bank that owns it, then they’ll probably be more willing to haggle on the price so they don’t have to deal with it. If, however, the bank is in the area and the housing market is hot, then they’ll likely price it according to the market and still sell it in a reasonable amount of time. The bank isn’t stupid. Just because they’re selling a house doesn’t mean that you’ll get a steal of a deal every time.
HUD homes are from owners that have defaulted on their FHA loans. These houses are often much cheaper than the market, but there is a catch – you have to physically live in the home for a full year after the purchase. In other words, these homes are not intended for investors, only primary home owners. So, if you’re looking for a deal on your main residence, then you may want to keep your eyes peeled for a HUD home in your area.
Short sales can be a pain in the butt, mainly because there are three entities involved: the bank, the seller, and the buyer. The seller has defaulted on their loan and can’t afford the house. In an effort to save their credit, they partner with the bank to try and sell their home. If they succeed in a sale, their credit is dinged a bit, but they owe nothing to the bank, even if the sale was below the amount they owed. As a buyer, these purchases can take quite a while because the seller just wants out of the house and will likely list it at a ridiculously low price, while the bank wants to get as much money out of you (the buyer) as possible. So, your initial offer might get considered, but you have to wait for a solid month to hear anything, and they then counter. You provide a new offer which takes another month…etc. etc. The process takes a while, but if you have the time, you can still end up with a quality house at a low price.