We all want a bargain when we’re looking for a new home, don’t we? This is probably the most money you’ll ever commit to. When you consider you could spend the next thirty years repaying that mortgage, every cent matters. With sums as large as these, even $5000 can make a world of difference. Yet, far too many of us forget that when it comes to the process of actually buying.
In an ideal world, you would make an offer on a property which gets accepted straight away. That’s the dream, and it does happen for some people. For the most, part, though, this process becomes little more than a drawn-out negotiation. Unless you strike lucky, the vendor will meet you with a counteroffer, and so on until you settle on a price you both agree with. In extreme circumstances, you may even find yourself up against other interested buyers. That could lead to a bidding war you wouldn’t wish upon anyone.
The trouble is, if you love a house, there’s a temptation to go too far here. Many homebuyers panic and commit to extreme amounts to secure the home of their dreams. Then, they have to deal with the repercussions for a long time to come. That’s hardly what you want when you’re just moving into a brand spanking new home. Talk about piling on the pressure.
To help you avoid that, we’re going to look at a few of the things you should consider before agreeing to an increased offer. By keeping these in mind, you can both put your worries at ease, and draw a clear line under your top budget. So, continue reading to make sure your that you can secure your dream home without going bankrupt.
Know how much you can afford
As mentioned at the start, many of us forget how much small amounts matter in the grand scheme of house buying. When you embark on your home search, you might not think twice about adding $20,000 onto your top budget. It’s all a drop in the ocean anyway, right? When it comes to the bargaining process, then, you might throw on an extra $5000 without thought. But, that's rarely a good idea. In any other walk of life, $5000 would be a lot of money. And, this is no different when it comes down to things. That’s why you need to be clear from the start about the very top of your budget. When push comes to shove, you may want to go a few grand above even that, but don’t do it. You can’t commit to the money you don’t have. Doing so would lose you the house anyway, and lead to a whole load of heartache and stress to boot. Instead, set that top bar, and make sure you keep negotiations under it. That doesn’t mean you need to miss out on your house. By starting below your top budget, you can still negotiate plenty. You can also keep those price increases reasonable when you know exactly how much you have to play with. Even if your vendor asks for another $1000, meeting them halfway with $500 could be what it takes to seal the deal. So, sit down and make sure you’re 100% clear on your absolute, no compromises, top budget.
Know what help you could get
Of course, going up to the limit on your budget isn’t ideal. It’ll leave you with no spending money, which isn’t a reality you want to face when moving house. But, does that mean you can’t even offer up to the ceiling you’ve set for yourself? Would it be better to dedicate some of that cash to get your home the way you want it? Not particularly. It would be difficult, after all, to kiss goodbye to a house when you do have the extra money in your bank account. Instead, consider that you could increase offers until your bank is empty, and still afford the other stuff you need. How, we hear you ask? Well, for one, you could get an increased mortgage. By agreeing to pay back more each month, you could level the cost and ensure you still save up fast for improvements and furniture. Of course, even that won’t cover the expense of extreme renovations. In that instance, you may be best off looking into options like a renovation loan. While borrowing more money isn’t exactly ideal, this would ensure you can secure the house and get it how you want it. Merely knowing options like these are available allows you far more bargaining room. That alone could guarantee you the home your heart desires.
Know whether you could increase the value
Before settling on a final offer, you also need to know whether you could increase the value of the property in question. Paying above the odds for a house which could bring money back to you isn’t a bad idea. However, spending a fortune on a home which remains stagnant or loses value is terrible news. In the long run, you can bet you would pay for it. Researching issues like these is also worthwhile when you consider that you can use them to back a lower offer. Getting a survey done is always a good first step here. That way, you’ll come to know about any structural or potentially costly issues. You can then quote this to the vendor when it comes time to buy. It may also be worth contacting builders and contractors. They can quote you for things like extensions and renovations. Knowing how much these would cost compared to how much they’d increase value will give you an idea of the amount it'd be worth paying. Again, you can explain this to your vendor. While they’re less likely to change their price for your personal preference, being honest can only help your case. That aside, taking steps like these will be a huge help for you personally. This can further help to cement that final offer price in your mind. It'll also show whether it would be worth hitting the roof on your budget or not. Most of us would have a lower final limit for a property without much potential for increasing value. By comparison, you may be willing to pay much more for a house which could become a secure investment over time.
We’re ending with a seemingly simple point which doesn’t get a look in when it comes time to buy. At the very last, ask yourself whether the property is worth as much as you’re offering to pay for it. When you get locked into an intense bargaining process, it’s all too easy to lose sight of the actual value of a house. This is especially the case if another buyer is involved. A shocking amount of people pay over the asking price in an attempt to outsmart their rivals. It’s the typical auctioneer's issue, isn’t it? Before offering a high price, though, ask yourself whether the property is worth that. This doesn’t just mean thinking about the asking price in place, either. You should also research the local market, and see how much other properties are selling for. If your bargaining has already risen well above the average, you might be better pulling out now. It won’t be pleasant, but you may well find a better house for the right price just around the corner. And, still, your bank balance will remain unharmed.
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