These money-saving methods are great to use in any market, and can save you thousands of dollars over the years
If youâ€™re looking to buy a house, youâ€™ve probably noticed that the market can be pretty crazy these days. With fewer houses for sale, we are very much in a â€œsellers marketâ€� where available houses are selling quickly and folks are paying more than ever to win contracts.
As someone who recently relocated to a different city for work, Iâ€™ve had the experience of both selling a home and buying a new one in this market.
My new house had multiple offers within 24 hours of going on sale. I had to put in an offer above the asking price and utilize an â€œescalation clauseâ€� agreeing to beat any competing offer up to a cap to win the contract.
If this situation sounds familiar, I want you to know that you can still save money during the process. Here are three ways to save money when buying a house in a sellers market:
Negotiate your mortgage rate
Okay, so youâ€™ve beat out competing offers and are finally under contract on a home. You may be thinking negotiations are over — you won the contract after all! But, there is still more work to do to save money on the deal.
First, you should always shop around for better mortgage terms. Did you know that you donâ€™t have to stick with the lender who signed your pre-approval letter?
After youâ€™re under contract and receive a â€œLoan Estimateâ€� form from your lender listing out all of the terms of the loan, itâ€™s time to shop around before you lock in your rate.
If you find a lender that can offer better terms — be it a lower interest rate, lower loan origination fees, or a credit from the lender at closing — take the competing offer back to your original lender and ask them to match it. If they can match the terms, great! If not, itâ€™s time to switch lenders.
Every time Iâ€™ve purchased a house, Iâ€™ve saved thousands of dollars from negotiating my mortgage rate. This is something you should always do regardless of the state of the market.
Negotiate concessions post-inspection
If youâ€™re a first-time homebuyer, you may be shocked when you receive your inspection report. These documents are often 100+ pages in length and list every single defect of the home youâ€™re about to buy.
It can be overwhelming! But remember, no house is perfect and the report will also point out which things are of greatest concern.
This is when your second round of negotiations with the seller begin. You can ask the seller to fix certain items before the sale, and you can also ask for â€œconcessionsâ€� — cash back at closing that can reduce the amount of money you need to bring to the table.
Your realtor can help you negotiate whatâ€™s best for you during this phase of the process. I have found it helpful to get major things fixed before the sale, and then to request concessions for other items that I can take care of down the line.
Build in income-generation options
If youâ€™re going to pay top dollar for a home, why not make some money on the back-end?
This might look like buying a house with a rental suite attached, or seeking out a layout that would make it easy to list a room on a site like Airbnb.
The first time I bought a house, my realtor helped me find layouts that would work well for Airbnb. The house I bought had a master suite in the back that could be partitioned off with its own separate entrance.
That suite brought in enough income each month to completely cover my mortgage!
If youâ€™re stretching financially to afford a home in this market, this could be a great way to save money on the mortgage bill and generate additional income long-term.
These three money-saving methods are great to use in any market, and have saved me thousands of dollars over the years!
What other strategies have you used to save money when buying a house in a sellers market?
Paris Woods is the author of The Black Girlâ€™s Guide to Financial Freedom: Build Wealth, Retire Early, and Live the Life of Your Dreams. Learn more and connect with her at pariswoods.com.
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