Why And How to Always Look for Great Real Estate Deals
We all dream of the day when we can set aside enough for a down payment, polish our credit score, and buy a house we can call our home. It is the most natural thing to do and being able to do it without financial strain, and even with a bit of an equity boost, because of a good deal, makes a huge difference.
Good real estate deals can be a challenge to come by and we often think that they are reserved for investors and industry sharks that know things we don’t. There is truth in that, the more you know the market and the more experience you have in buying and selling property, the better you are equipped to spot a deal.
But the internet and the free flow of information is changing that, and now we can all have access to a wealth of data and quickly learn how to use it to make better purchasing decisions.
84% of all home buyers in 2017 used information they found online to make crucial decisions.
How to Spot Great Real Estate Deals
You can look for a house like a pro if you keep an eye out for some key indicators that point to a great deal. First, know the market in the area you are looking to buy. Study listings and things like how long they stay on the market and why they are listed for just a few days or for months.
Hot deals usually don’t last for more than a few days on the market. Timing is everything because good real estate deals are gone fast. You can keep ahead of the curve with BelowMarketValue.com property insight, employing quick search functionality and setting up Instant Email Alerts in the area you are looking for a new home. You can also buy our County Reports to get a quick list of many properties in one report.
If a house stays on the market for too long that may be because the owner is asking for too much, the property needs a lot of work, is next to a busy highway, or another issue. And if it is gone in a day or two that usually points to a good deal, desirable neighborhood, good school district, or another positive indicator.
Start by looking at the prices of the homes in the area you are interested. Look at tax appraisal and find out if the area is gentrifying. The deeper you dig the better deal you can get and the happier homeowner you will be.
Always Look for a Great Deal on a House
The average home buyer saves for years to buy a home that will slowly appreciate and build up equity. So when the time comes for buying you want to make the best of your investment, both in a comfortable home and in early equity that will serve as financial shelter, and repay itself if you sell or give a head start to the next generation.
That is why you should always look for deals and properties that are undervalued. Smart buys are for everyone, not just insiders that have been in the game for years.
Often, you have very little time to act on good homes that are below market value. That is why you should stay informed so when you see a deal you can act on it. And if you have second thoughts or concerns, you can put in an Option Contract that holds the property for you while you properly vet it, without having the obligation to buy it.
As mortgage rates are projected to rise this year we are experiencing a buying surge with houses staying on the market less than the average for 2016. 80% of the growth will be in the suburban market as people are putting value on the low traffic and peace and quiet.
Great Deal on Your Dream Home is a Win-Win
Keep in mind that the more work you put into your home search the more likely you are to get a good deal.
In order to get the win-win effect of buying a great home at a great price, you have to be constantly on the lookout and be prepared to act quickly. Undervalued homes come to the market every day, because some owners default on their mortgage, they are relocating, looking to pay debt, or have a conflict with a co-owner.
So that urgency makes them sell below market value and allows you to get a great deal on your dream home. The better deal you get on your home the better head start you get on the appreciation of the home value and boost your wealth by instantly turning your new home into a piggy bank.
Instant Home Equity Boosts Your Balance Sheet
Unlike buying a brand new car, where the day you buy it, its value immediately plummets, real estate appreciates in value over the years.
A great deal can give you a head start on that equity build up. So if you buy a home that is undervalued the difference is instant equity that will only increase with time.
For example, if a house is valued at $200,000 based on size, the year it was built, and neighborhood appeal, but the owner is relocating for a new job and has to sell it within a month, he or she may opt to sell it for $180,000 to speed things up. In that case, the buyer who pays the $180,000 gets immediate home equity of $20,000. That means that if you opt to sell it without rushing after you buy it, you can sell it for $200,000 and collect a profit of $20,000.
And even if you are not buying for reselling or investment purposes you have $20,000 of instant home equity on your balance sheet.
Avoid Private Mortgage Insurance (PMI)
Another great reason to always look for below market value property is to avoid Private Mortgage Insurance (PMI). PMI is an insurance type that you often have to pay if you put in less than 20% down payment. It is usually required by the lender and is provided by a private insurer.
One way to avoid PMI is if you have over 20% equity in your new home. So if you are putting down say 10%, you are short another 10% to the threshold and your bank will require you to get PMI, which will be added to your mortgage payments. But if you buy an undervalued home that is, say 10% below market value because the seller was in a rush, you cover the difference to the 20% equity and avoid PMI.
PMI is usually about 1% of the entire loan, so if you are borrowing $120,000, you will be saving $100 dollars per month.
Keep an Eye Out for Home Deals in Your Area
Bottom line is you should always stay on top of your real estate deal listings. Sign up for email alerts so you can stay in touch with the market and act if you see a house you like. Think of it like going to the clearence rack first when you go shopping for shoes. You might get lucky and find a pair you like that fits you. Only, buying a house is a once in a lifetime deal and if you get a good one it can be paying off infinitely.