5 Tips for Getting a "Good Deal" When Buying a Home

Dave,

We have recently married and are hoping to start a family in the next year or two and want to purchase our first home before having children. We currently rent, but feel the time is right to begin looking for our first home. It is extremely important to us that we get a good deal. Getting a good deal is number one on our list of priorities, as it will help ensure that our home purchase will not only turn out to be a great place to live, but also a good investment when we eventually need to sell. What tips can you provide for getting a good deal?

Stephanie and Mark, Fruita

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Stephanie and Mark,

Great question as getting a good deal is always at or near the top of many home buyer list. First make sure you define your idea of a “good deal”. There is a difference between a “good deal” and a “steal”. Steals are a lot harder to come by and there are many lost good deals in the quest of a getting a steal. I have heard a saying that says, you make your money when you buy, not when you sell and I believe it to be true. There are several things you can do to help ensure that you get a good deal when you purchase.

1. Get Educated: The more you know about the market and the price range in which you are purchasing, the more likely you are to get a deal when you purchase. Knowledge is power and part of getting a good deal is being able to recognize one when you are presented with it and making a realistic offer.  I have seen many a “good deal” lost because the buyer did not recognize the deal and did not make a realistic offer.

2. Find a Knowledgeable Real Estate Agent:  Notice I said knowledgeable. Again an agent who can help you not only find, but identify a good deal is a huge asset. You need an advocate who is scouring the market for you, looking for that “just right” deal.

3. Use a Reputable Local Lender and Get Prequalified: Once you have found your “good deal” you need to be ready to pounce and pounce with confidence that the sellers can appreciate. A reputable lender behind you will help you beat out other bidders. Trust me, sometimes it’s not all about how much the offer is, sometimes it’s more about how likely is it to close. The prevalence of fly by the seat of their pants lenders adds weight to an offer backed by a reputable and trusted lending partner.

4. Be Decisive: Part of the art of getting a good deal is the skill of being decisive. Don’t hem n’ haw, when you decide to act, act decisively and don’t look back. Steps 1-3 above will help you be decisive. I have also seen many deals get lost, while waiting on a decision.

5. Get a Good Inspection: Part of getting a good deal is making sure that your good deal is still a good deal after you close. Your good deal, may not be such a good deal if it needs a new roof after living there 6 months.

These are not the only things that you need to do to help ensure you get a good deal, but they are in my mind the most important. If you follow these 5 simple steps, you will be well on your way to getting that deal in which you seek. Much success in your pursuit of the often elusive, but always rewarding good deal! Happy New year! 

Dave Kimbrough
The Kimbrough Team

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Tips for Making a Strong Offer on a Home

Dave,

We’ve got a few questions on home prices. Do Realtors list homes at a higher price knowing that most offers will come in below asking price or are homes listed for close to their estimated value? We are going to be looking for a home in the upcoming months and are wondering how we should determine what to offer on a home if we find one we like. How do you determine value and what to offer? Furthermore, what happens if an offer gets rejected? We are just trying to figure out how this part of the home buying process works. We love reading your column each week!

Thanks,

Jody and Tom, Grand Junction

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Jody and Tom,

Ok, you do have a few questions, but they are all good ones! I will do my best to answer them all, but excuse my brevity as my space is limited. The way Realtors price homes varies from agent to agent and market to market. Some agents will do just what you are talking about, price the home above market value expecting a lower offer. With this technique the agent builds in cushion to come down when the lower offer arrives, but also risking that the price is far enough above market value that it gets skipped over by prospective buyers. Other agents will try to price the home in line with sold comparable properties, within the past 6-12 months is best, and then adjust up or down depending on market conditions and competing listings.  Pricing is at least as much art as is it is science and there are a hundred ways to skin a cat. The more you try to figure it out, the more confusing it will likely be. Your primary goal should be to not try and decide how they priced the property, but have your agent help you determine a fair price for the home from comparable property sales and similar active properties and make what you believe to be a fair offer.

“When you find a property you want to make an offer on, your agent will be able to help you determine a fair offer price.”

When you find a property you want to make an offer on, your agent will be able to help you determine a fair offer price. I find that most buyers look at quite a few homes before purchasing. By the time they decide to make an offer, they have a good feel for the market and know what asking prices are and are not appropriate for the market conditions. If you and your agent determine that the price is higher than it should be then feel free to provide the comparable properties you used to determine your price when you make your offer. Many times the list price is not the agent’s suggested price, but the price the seller “needs” or “wants” in order to sell. Keep in mind that price may or may not be in line with the market, but providing a thought out analysis for why you are offering your price might help “make your case” with the seller and the seller’s agent. Whenever you make an offer at less than asking price you always run the risk that it will not be well received and even rejected.

Rejected offers are never the goal, but depending on your offer price sometimes they are the only way for a seller to respond. If the offer is insultingly low (greater than ten percent) then a rejection may be the best way to respond. A rejected offer by the seller can be received by the buyer in one of two ways. It will either be received as “take a hike” or it will be received as “reload and try again with something closer.” On a rejection, the choice of how you respond will be up to you and dependent on how much you really love the home. You can either reload and try again with a higher offer, or move on to your next choice! Keep in mind there is no playbook for how these things work and that is why the agent you choose to work with is of the utmost importance.

Choosing an agent who is experienced and has a proven track record is a critical part in helping you pre-determine your desired result. If you are out to sea and find yourself in the middle of a storm, big or small, would you rather have a captain that has been there, done that and survived or a green horn who not only does not know what to do, but is looking to you for answers and direction? The answer is obvious. Experience is undervalued when the going is easy, but there is no doubt about its value when the going gets tough! How about that for some free life advice while answering a real estate question! It’s because of questions like yours that this column exists, so thanks for reading. Best of luck.   

Dave Kimbrough
The Kimbrough Team

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7 Tips for Winning a Home That Has Multiple Offers

Dave,

Some family friends just bought a home here and after hearing the details of their experience, we’re a little intimidated to start the home buying process this summer (we’ve been planning and saving to purchase a home—and we’re almost ready!). Our friends said that the home they ended up buying was actually the fourth home they had written an offer on. The first three homes they wrote offers on had additional offers and obviously, their offer didn’t win the contract. Their agent said it’s just the nature of the market in their price range right now. We’re in the same price range ($225,000—$250,000) and don’t have much wiggle room to move up in price. Aside from increasing the amount we offer on a home, do you have any tips on how to win in multiple offer situations?

Please help!

Marissa, Grand Junction

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Marissa,

Wow! Your observations are absolutely correct! The segment of the market that you are searching in is moving at a very brisk pace and the competition can be fierce! Multiple offer situations are happening with more and more regularity, so as a buyer, you must be ready and willing to put your best foot forward right out of the gate. If you hesitate or make a mistake, you decrease your chances of success exponentially. Don’t be afraid to compete! It’s a bit like dating…If you find just the right one, be prepared to compete and win! Grab hold of a competitive mindset and remember most houses are lost over a fairly small sum of money or an overlooked detail that would have cost nothing! 

There ARE some simple things that you can do to help move your offer up in the pecking order when the offers are presented to the seller!

1. Be willing to offer more than asking price or include an escalation clause that will automatically increase your offer over and above the next highest offer up to a price ceiling! I have seen many an offer lost over $500 or $1000. If you really want the property and there are multiple offers, go 1-2% over asking price and watch your chances soar! If the home is $225k, offer $229k and my bet is you get it.
   

2. Offer more earnest money than what the seller is requesting. Earnest money is often times an overlooked negotiating tool that absolutely DOES mean something to a seller and can tip the scales if the offer prices are similar.
   

3. Be flexible with the closing and possession date. This will show the seller that you are willing to work with them and make the transition fit their needs.
   

4. Be willing to cover your own or at least part of your own closing costs. Over 70% of the offers I see contain seller paid closing costs. Eliminating these closing costs indicates to a seller that you are a stronger buyer. After 16 years and thousands of contracts negotiated, it is a fact that most sellers would prefer buyers pay their own closing costs.
   

5. Do not ask for personal property or things that the seller is not offering as inclusions with the property. If they have not included the nice new looking refrigerator, don’t ask for it. If you find their lawn furniture comfy don’t try to throw it in, go buy your own. I have yet to find a seller who looks upon request for personal property with a favorable eye.
   

6. Be willing to waive your inspection contingency! If you do this, it will be clear to the seller that you are making a serious offer and have serious intent to purchase the home. This is the last resort move, however, it is a doozy if you have confidence that the property is in good condition or you can handle whatever problems you uncover.
   

7. Use a local lender that has a good reputation! Accepting an offer where the lender is local will sure make the seller and their realtor feel better about the chances of seeing the closing table.

“These are several techniques to help you up your game in this increasingly more competitive real estate market. Notice that none of these are high dollar techniques or anything really fancy, but I promise they can make a difference.”

These are several techniques to help you up your game in this increasingly more competitive real estate market. Notice that none of these are high dollar techniques or anything really fancy, but I promise they can make a difference. If you combine 2, 3 or 4 of these techniques in the same offer you will probably have an unbeatable combination. Remember sometimes it takes a little courage, faith, and risk to get what you want so don’t let fear or hesitation hold you back from making things happen. When you craft your offer with your agent, look at it through the eyes of a seller, be willing to think outside of the box and create a win/win for both parties and I bet you have a new home in no time at all. I’ll bet the next time you submit an offer, it will be FUN!  Good luck.

Dave Kimbrough
The Kimbrough Team

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