Buying a property, whether it’s a detached house, townhouse or condominium, is no meager expense. In fact, for most people, buying a home represents the single largest financial transaction they will ever make.
Given the magnitude of making such a purchase, it’s imperative for homebuyers to save wherever possible. That’s not to suggest you settle for a home you aren’t happy with; instead, it necessitates research, patience and persistence. The ultimate goal of house-hunting is to find the best place for the lowest cost. While it’s not easy to reach the nexus between buyer satisfaction and thrift, there are a handful of tried and true steps all homebuyers should be aware of before – and during – their search.
Tax refunds, exemptions and rebates
Because buying a property is such a tremendous financial stresser, it’s important to save wherever you can. That includes cashing in on any exemptions or rebates you may be eligible for. Exactly what you’re eligible for depends on where you live, as different federal, state and municipal regulations apply.
Discuss the benefits you’re eligible for with a realtor or real estate lawyer. Common rebates relate to first-time buyers and people with physical disabilities, but there are several other possible options, depending on your location.
Separate wants from needs
Most people want to live in a lavish mansion jam-packed with cool amenities. Unfortunately, a small number of us can afford that.
It’s important to identify which amenities are most important to you. For example, if you love gardening and fantasize about building your own little natural paradise, then a sizable backyard may be a must have. And maybe you would like to have a room that functions as an office, but it wouldn’t break your heart to just put a desk in the living room. So maybe the office is just a want.
In determining your wants and needs, there’s no strict model to follow. It’s all about what’s important to you. Once you’ve established your priorities and have begun to look around for suitable matches, you’ll come to understand whether you can get everything you want while staying in your budget, or have to sacrifice a few of those wants to secure a must have.
Use a realtor
Sometimes people like to go-it alone when buying a house to save money. However, you should know that both the seller’s and buyer’s real estate commission is paid by the seller, which makes a real estate agent free for the buyer. Well, free in principal.
See, even though the buyer doesn’t pay for their own agent, the commission that agent charges will often be included in the sale price of the home. So theoretically, if the seller didn’t have to pay a commission on your behalf, you could probably wrangle a lower sale price.
But real estate agents are immensely valuable resources to homebuyers. They answer questions, find suitable homes, negotiate and help navigate the legalities of the transaction.
So while not using an agent may save you some money, it also forfeits a ton of negotiating leverage and market knowledge that will usually wind up paying for itself.
Plan for the full buying process
There’s more to buying a home than finding a place you like and saying, ‘I’ll take it!” It starts with establishing your budget and your wants and needs, then searching for places, visiting open houses, negotiating, etc. Since this article is meant to be an overview, we’ll stop before we dive too deeply into it all. But if you’re interested in taking that deep dive, this guide helps to prepare anyone looking to buy a new home.
Suffice it to say, there’s a great deal to the process, and preparing yourself as soon as possible is ideal. This way you can understand the timelines and budgets you’re working with, and won’t face any unwelcome surprises when you find that perfect spot.
Getting your target home inspected costs a little bit of money, but it can save you a ton of money in the long run. If you buy a place without knowing its weakness, you may soon find you have to redo the wiring and put up a new roof. Getting a home inspection is always advisable as a just-in-case sort of insurance policy.
Don’t just take your bank’s mortgage rate
We’ll finish up on a simple but oft-overlooked note: compare mortgage rates. Most people go with their bank’s because it’s comfortable. But if you find a lower rate – even a couple of percentage points lower – you can saves tens of thousands of dollars over the amortization period of your mortgage. So, compare rates!