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

---

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

Have a Question? Ask Dave!

Would it be Better to Sell or Rent Out Our Home?

Dave,

How do you decide if someone should sell or rent their home? I was recently promoted at my job and we’re scheduled to move to Denver in about two months. Do you have a set of questions we can ask ourselves that will help us know if we’d be better off renting or selling? We’d really appreciate any guidance you have to give!

Derek, Grand Junction

---

Derek,

Congratulations on your promotion! A promotion generally means there are good things ahead for you and that is exciting. There are so many things to consider when you are deciding whether it is best to rent or sell? I will give you a few questions to ask yourself and these should help you evaluate which decision is best for you and your family. Keep in mind this is just the tip of the iceberg. There are countless other things to consider, but these are the biggies. 

1. Are you cut out to be a landlord? Some people are and some are not. You have to accept that your renter will not take care of your old home like you did. For some this is one item proves more stressful than some can handle.

2. Will the property cash flow and if not, can you afford for it to be short month after month?  Remember If your mortgage is $1,600 per month and you can only rent it for $1,300, you will be coming out of pocket $300 per month (plus maintenance) and that will quickly add up to over $4000 -$5000 per year. Can you afford the payments in full if it sits empty for a month or two or three? 

3. If your renter does not pay or are constantly late with their payments, are you built to handle conflict? Do you have the personality to evict them? 

4. Do you have the time to manage a property from out of the area? Renting a property out will take extra time, some more than others. Answering phone calls, scheduling maintenance, repairs, property checks…all this takes time and doing it from afar can be really risky.

5. Are you pretty sure that the market is headed in the right direction? If you are holding on and the market is trending down the upside for renting it out will only be if you are going to hold it long term. 

Remember, not all renters are created equal. Some are easier than others. If you decide renting is the right choice, but don’t want the potential headache you can always hire a property manager. Trust me, it can be the best 10% you ever spend! Even though renting might be an appealing option, don’t underestimate the upside to just selling and moving on.

If you decide to just sell you can walk away and move on and that can be huge! If you don’t plan to come back, then you are just prolonging the inevitable and in many instances just ripping the band aid off is the best option…even if it is painful at the time! Don’t undervalue the freedom of being able to leave the old house in the rear view mirror. If you have equity in your home, you can use that equity for a down payment on your next home. Selling also relieves you of the stress of dealing with renters and the maintenance of a home that you are no longer living in. 

Honestly, my experience has shown that selling is the most popular choice if you are moving out of the area. If you do decide to rent it out, I would highly recommend you hire a property manager and NOT go the “do it yourself” route. Best of luck with the new gig and Merry Christmas!

Dave Kimbrough
The Kimbrough Team

Have a Question? Ask Dave!

Bang for Your Buck Winter Renovations

Dear Dave,

We are considering selling our home in the spring. Do you have a seller’s checklist or something that you give to people to help them figure out what will add the most value when they sell a house?

We’re just trying to decide if there is anything we can do this winter to help get more money for our house when we do sell.

Thanks for the help!

Don and Linda - Grand Junction, CO

---

Don and Linda,

YES!  No specific checklist, but you can make a huge difference over the winter! Maybe you should wait until after football season is over, at least until college football is over. Then you can start taking advantage of the cold winter months…INSIDE. Where you can really make a difference and use the "indoor" months to build equity! There are countless things you can do and not break your bank while doing them.

The first two things I always recommend is to evaluate your interior paint and floor coverings. Nothing says “come buy me” like new paint and carpet. Who doesn’t love the smell of new paint and carpet? It is almost as good as the smell of my Moms homemade Pecan Pie!  Mom, I’m just kidding, your Pecan Pie smells slightly better. Anyways, new paint and new flooring are BIG bang for the buck items and if you have a steady hand you can paint most everything yourself. The next big “bang for your buck” improvement is lighting and plumbing fixtures. Again, you don't have to rob a bank to make a huge impact.

“Lighting and plumbing can make a huge difference and not break the bank. The beauty of Lowes, Home Depot and other DIY stores is that it has made cosmetic home renovation easy and inexpensive. ”

Lighting and plumbing can make a huge difference and not break the bank. The beauty of Lowes, Home Depot and other DIY stores is that it has made cosmetic home renovation easy and inexpensive. Try this on for size, while you are replacing the light fixtures, jump outside the box and get crazy by getting rid of all the old brass door knobs and door hinges.  If that is not enough, paint all those old dark brown doors white and just watch your hallways expand before your very eyes. These easy corrections are all inexpensive and offer a great return on investment.  The last inexpensive fix is to get rid of any and all “vintage style” wallpaper. I am not talking about the new styles that are in vogue, but the old Brady Bunch stuff. You know what I am talking about…get rid of it. Vintage IS coming back in, but not that kind of vintage! You will not have even a minute of fun doing it, but you will be so glad you did when it is over. If you are looking for a more significant and costly project, you have options there as well.

Bathrooms and kitchens top the list for “whole room” remodels. A renovation of these two rooms will have the most significant impact on both the look and feel of your home, but also your wallet. You can make big changes with new counter tops, back splashes, tile, sinks etc. If you can stay away from having to completely replace the cabinets you might just have some money left over for retirement. The goal here is to make an impact but spend your money wisely. You want to make high impact changes for low impact cost.  Follow these guidelines and I will almost guarantee you will be thrilled with your return on investment.

Hope this helps and I would bet that by using the winter to "prepare" your home for sale you will love the results!

Dave Kimbrough
The Kimbrough Team

Have a Question? Ask Dave!

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

---

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

Have a Question? Ask Dave!