3 Tips That Will Instantly Make You A Better Home Buyer
Everyone who has the experience of buying a house the first time will know that they have left something on the table. The more frustrating part comes when they remember the pitfalls they became victims for even though they were warned beforehand about them.
In industries as evergreen as real estate, thousands upon thousands of publications containing home buying tips and guides have already been distributed to the masses through the centuries. Yet even till today, people (especially first time buyers) still continue to step on the mousetraps everyday.
The irony as mentioned before, is that a great effort is undertaken by authorities to educate consumers about the exact mistakes they will be prone to make.
It’s like warning a pedestrian that he will fall into a manhole if he keeps walking straight. Yet the pedestrian continues his straight route and the inevitable happens.
So I’m not here to teach you something new. Every advice you can possibly get for buying a home is already out there in the public domain.
I’m here to REMIND you of 3 BIG tips that will help you avoid the common mistakes of home buying.
1) Throw your emotions out of the window
Imagine walking into a house viewing. Then your pupils enlarge so much that the seller can’t tell the white from your eyes. You get as excited as a chihuahua greeting it’s owner as soon as you enter the front door. You smile like a quokka as soon as you see the room where you can operate that home business lingering at the back of your mind. Then you go to the full length windows in the living room and take in the view. Then you say “This is my dream home!”.
After observing this, do you think the seller will be more likely to:
- Lower the price for you
- Stick stubbornly to his asking price
- Find excuses to raise the price as he smells blood
Property transaction prices always go through a negotiation push-pull process. If your emotions have caused a seller to resist any negotiation at all, you have definitely done something wrong. You have allowed you emotions to surface, which make you a less powerful negotiator.
You have done nothing wrong from a personal perspective since we champion freedom of expression. But in negotiations, it is all about business. This is especially so for real estate dealmaking when there are experienced agents on the side of sellers trying to rough out a deal to boost their commission checks.
You might love a house, you might find one that gives you that weird cozy feeling of serendipity, you might even genuinely feel that a house ghastly resembles the one you frequent in your dreams.
Whatever positive feelings that arise from your visit to a viewing, you have to suck it in and be visibly impartial. You can do that trademark celebratory jiggy of yours later… when you close at a lower price.
Other than that, the only frame of mind you want to display for a seller to observe is one of nonchalance or that it’s not exactly what you are looking for. This throws the seller into defensive mode and lays the foundations for a fruitful negotiation in your favor.
2) View a few houses
For a product that costs so much money, it makes absolutely no sense to limit your options to just one when there are so many alternative available.
A home is like a shirt. It can look good with a fancy design or that the size is exactly what fits you. But you will only know how good you will look in it after trying it on in the fitting room. In fact, most of the time, what looks good on a mannequin ends up looking like crap when we wear it.
So don’t just go through the property listing in the newspapers and ignore listings that meet all of your criteria except one.
For example you might have a personal preference to get an apartment on a higher level. So you strike off one listing on the forth floor even though it meets all your remaining requirements. But you wouldn’t realize that the building resides on higher ground giving you a fantastic view until you visit it.
Buyer’s remorse can be very costly in real estate. So don’t get into a situation where you have a indulge in regret after buying a house. You can avoid that by viewing as many houses as possible which meets your buying criteria.
If you find yourself deciding to buy the one only house you have viewed, take a step back and review why. Maybe it is partly due to an agent who have somehow manipulated your desire, maybe you are being lazy, maybe the price meets your budget when you can actually get a better house for the same price.
3) Always open with low offers
Don’t fear the prospect of being labelled a cheapskate for making lowball offers. Sellers will expect interested parties to make low offer. Just like how buyers expect sellers to ask for the sky.
Most negotiators make low offers in the hope that both parties can come to agree on a price that meets in the middle. But for you, have an objective to find out the counter offer response from the seller. Your lowball is just a negotiating tool to feel out the seller.
If for example, we are talking about a $500,000 house, and you make an offer of $400,000, a counteroffer of $475,000 shows you that the seller is ready to negotiate. While a counter of $499,000 reveals clearly that the seller has little motivation to negotiate. This is time to move on to the other houses in your shortlist.
Like a rule of law, the more pricey a house is, the more room there is for negotiation. This is because owners of such real estate are already sitting on big profits. So the perceived “loss” for lowering the price has a lesser impact.
Everything is negotiable in real estate. Never ever belief an agent who tells you that the price is non-negotiable.
Last year, a friend of mine made an offer to buy a house she really liked for $555,000 and was refused. After sharing her encounter with me, I volunteered to help. As her offer was already refuse, I figured that I will not be jeopardizing anything since there was never a deal in the making.
What I did was go through the major online real estate listing portals to look for very experienced real estate agents. I called up a few and decided on one. I told him the terms upfront so that there will be no miscommunication later.
The terms I proposed was that I will not be paying commissions. He will have to co-broke with the selling agent for a share of the commissions paid by the seller. I knew that in that specific situation, getting a veteran agent involved can help to convince the selling agent that he represents a serious buyer. It does help that my agent will have a wealth of experience in his court too. He called the selling agent to gather as much information as possible.
We then went to the selling agent and made an offer of $525,000. To my surprise, it was accepted! Now of course my friend tagged along to the agreement meeting for the paperwork. It was then that the selling agent recognized her. It was an awkward moment to say the least.
I suspect that it was the seller’s agent that declined the initial $555,000 offer instead of the seller himself.
But the refusal to sell actually led to events that helped my friend save $30,000. What a turnaround.
As a closing thought for home buyers, don’t forget that a house is a big ticket item. A mistake can lead you to lose not just a few cents or dollars, but thousands of dollars. Now imagine how much damage it can do to your savings account if you make many mistakes that compound onto each other. Keep these tips in mind and apply them in practice. Or you could be kicking yourself later just like everyone else.