I hope the title grabbed your attention. As a full time real estate agent in the Indianapolis Area, almost every buyer I talk to today starts the home buying process looking for a "deal" on a home. While the concept sounds great, it is hard to put into practice for a few reasons and can actually be detrimental to your long term financial health. Hopefully this information will help.
Defining a Deal: Everyone has a different definition of that term. Universally it seems to involve spending less or getting something cheaply. The challenge is that no homes are created equally. If nothing else they are always on a different piece of property. Spending less may just be getting less. Hence the first challenge or risk in only seeking a deal.
Define Your Wants and Needs First: Every home search should start by clearly understanding your wants and needs. When working with buyers, I always meet with buyers and work together with them on a needs analysis prior to looking for a home. I would recommend that a buyer never buys a home that fails to meet their wants and needs.
Why is a Home Underpriced? Homes are rarely "underpriced". The few that are sell very quickly. If a home price seems too good to be true, you (and your agent) should start asking questions. Some good questions would be:
- If this floorplan currently desirable or functionally obsolete?
- Is the home in good repair.
- If the home needs structural work completed, what is the cost of repairing the home and how will you pay for the repairs?
- Do you have the time and the expertise necessary to ensure the work is completed properly? And lastly is the home in a desirable area and is there anything planned for that area which could negatively effect future values?
When Negotiating Never Use a List Price: All too often I hear buyers say they would never pay more than 90% of a list price or something to that effect. When buying a home, never, never, never use the list price as a benchmark for an offer. The reason for this is simple...a list price is a sellers wish and may be unrelated to reality. Some sellers choose to price their homes aggressively (close to comps) while others insist on pricing their properties way too high. For these reasons offers should be based on comparable sales, the condition of the property compared to these comparable sales and the current competition, and current market conditions. Put in place a negotiating strategy with your agent which takes into account these factors and your home buying goals.
The great news is that with proper planning and market knowledge, Indianapolis area buyers can definitely get good value on a home today. Start by defining choosing an agent who will help you define your wants and needs, and narrow your focus to the areas you want to live. If a home meets this criteria and is a place you would enjoy living, that is the best "deal" in real estate!