Are you considering buying a home but the economy is suffering a recession? When real estate sales are pretty low, and there is an excess of homes for sale, it is the right time for buyers to buy a house on a budget. However, it is still important to learn when you should jump at the sale or when you should restrain and avoid the impulse to buy. Here are some simple tips for house hunting during a down real estate market.
Do Some Research
Home buyers are typically at an advantage in a struggling real estate market; however, this does not mean that you must take for granted the act of gathering proper information. As a home buyer, you must look into online listings, talk with a real estate agent, and check the local newspapers. Doing so will help you learn about the price range for the particular community, and learn what is considered overpriced and vice versa. In addition, this research will help you in placing a bid reasonably.
Set Your Budget
How much mortgage and downpayment can you afford? This is the critical question when buying a house. Your income, savings, and local real estate market will help determine your budget. Once you set your budget, you must commit to it. Some real estate agents might offer you properties that will exceed your budget, but you must stay firm and stick with the property you can pay for.
Get Your Mortgage Pre-Approval
Before you even start visiting the properties on sale, you must first get your mortgage pre-approval. You don’t want to find the house you love only to let it slip away because you are unable to qualify for a mortgage. Getting preapproved for a mortgage is a crucial step in the home buying process since it provides you with an idea of what mortgages you can qualify for, and how much it will cost you. Some of the factors considered to qualify for a mortgage can include your income, credit history, interest rates, type of loan you select, and the amount of cash you have for downpayment.
Look For Motivated Sellers
When house hunting during a recession, it is only natural to find homeowners who want to sell their homes immediately. These homeowners are known as motivated sellers, and they can give you more bargaining power. Some of the signs that homeowner is a motivated seller include:
- The property has been in the real estate market for several months
- The property has undergone several reductions in price
- When the homeowner has already moved out and may be paying two mortgages
When you are in such situation, it only makes sense to ask the seller to throw in some of the furniture and fixture you like or ask them to cover the closing costs in total or in part. To help you look out for motivated sellers, you can hire a real estate agent. The agent can track down the original list price as compared to the selling price for similar homes in the neighborhood. Additionally, the agent can also find out how long the property has been for sale and determine the price reductions that occurred.
Negotiate With The Real Estate Agent
When the real estate market is down, a lot of real estate agents are also struggling. During such predicament, both agents and real estate companies may be more inclined to discount their commission to get a good deal. But the seller pays the real estate agent, why should you care about their commission?
Commission is crucial to the buyer because the seller most probably listed the property at a higher price to pay the agent and still be able to get a decent profit. You can negotiate with your agent and ask the listing agent to discount their commission so that you can get a good deal. This way, both the seller and the agent can get what they want.
If you are house hunting during a struggling market, you may have an advantage but it doesn’t mean that your savings on the properties you buy is guaranteed. For this reason, you must plan ahead, do your research, get organized, and employ a trained professional to help you get a good deal in a down real estate market.
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Kris Lim is a real estate agent who helps homebuyers in finding the right home that will suit their budget and needs. She also writes for real estate websites, as well as home builder websites that offers high quality new homes Spokane Valley Washington.