10 Ways to Save Money in Real Estate!
There are many ways to save money in a real estate transaction that you may not be aware of. Here is a list of 10 ways that you can possibly save money in a transaction.
1. Choose the right agent! I know this sounds cliché and salesy, but let me give you an example in a recent transaction. Two homes were listed that were model matches across the street from each other. One was listed by our team and another by another agent and company. The one from the other company went up for sale first and ours approximately 20 days later. Ours sold first, closed first and sold for approximately $8,000 more for essentially the same home. Don’t pick an agent just because they are family friend, because you want to help them get started in the business or because you used that firm in Kentucky. All real estate agents are not the same, otherwise we would all be on salary. Don’t pick an agent from a huge team unless you like automated service and don’t pick an agent with no production. Pick an agent based on a proven track record (over 1400 homes sold and # 1 in your are for the last 4 years.) There are many other places we can save you money in a transaction which I will outline in the balance of the article.
2. Take your agent with you on your first visit to a builder. Although we commonly cannot save you money at the new builder, we can offer you a discount on the home you have to sell. We can also make recommendations on which upgrades will likely maximize the value amount on resale as well as guiding you towards and helping you obtain the best financing available.
3. Ask for discounts from the title company. Our title company, Driggs Title, currently offers discounts for school teachers, military, over 55 years of age, first responders and investors of up to 30% of the escrow fee. Not a huge sum of money, but every bit helps.
4. Speak to us before you commit to a an equity buyout company. I know it seems like common sense, but the big money buyout programs are not in the business of buying homes and reselling them along with the associated costs to hold and resell unless they are doing it for a profit. The profit required to invest $300,000 in your home is substantial and it is coming out of YOUR EQUITY. It may seem easy, convenient and a lot less hassle and it is. But at what cost? If you have to pay for your own mover, put up with showing your home and then arrange for those pesky repairs, it seems like a hassle. The buyout company is likely going to charge you market value for those repairs, charge the same commission, add on a 3% service fee and offer 10% less than what I can get for the same home. On a $300,000 home, that is $26,000. Most of us can put up with some inconvenience for that much money but at the very least, consult with us first before you go down this route.
5. Perform repairs before you list the home. Almost every transaction has some repairs requested. Many of these we can spot on our initial visit. In many cases, we have contractors who can perform the work less expensively or you as the homeowner can do these repairs yourself if done in advance. It may not seem like much of a saving but if the repairs are not done in advance, many times the buyer will discount the offer based on obvious repairs and then ask for the repairs as part of their inspection. Nothing worse than getting double dipped.
6. Move twice if necessary or buy and then sell! The fact is NOBODY likes or wants to move twice. That being said, placing difficult or constraining limitations on your move date adversely effects the consideration or money to be paid for your home. This can be mitigated somewhat by the use of storage pods etc, but you still have to live in temporary housing for while. The best way to analyze this is to compare the cost of moving twice, with all of its inconveniences, to the amount you are likely to lose by imposing these restrictions on the sale and potential buyers. Another popular option, if you are able, is to purchase the home you want, and then subsequently sell the existing home. This is not without cost either, if you have substantial financing or holding costs for both homes and this must also be factored into the equation.
7 Make the home available to show! The availability of a home to view is critical in the sales process. This is the point of sale! Placing great restrictions on the amount of notice or the times available to show a home can make a huge difference in the timing and amount received in a sale. Once a home becomes stale on the market (because it is difficult to show), it becomes increasingly difficult to market and generally results in a lower price received. Ideally, every home would be available and ready to show on a moments notice. We understand that that simply deviates from the realities of life. The closer you can come to that timing, likely the more money you will save.
8. Pick the right mortgage lender! Of course, this only applies to the buyer but this can make a huge difference. You should shop for your lender among local, reputable, lender. Using an out of state lender or an underperforming one with a bad reputation can hurt your ability to negotiate or even get your offer accepted in the first place. It is also not simply limited to what the lender charges or the rate they offer. There are many instances when a delay or the inefficiency of the lender results in unexpected charges to re-lock a rate or the out right cancellation of the sale for non-performance.
0. Price the home correctly to begin with! This is one of the most important things you can do. An overpriced home is easily recognized by the buyer because they have looked at all of the comparable properties. When they make an offer on an overpriced home, the buyer generally double dips it. If they think the home is overpriced by $10,000 they will likely offer $20,000 less. Even the best negotiator cannot overcome the readily apparent overly inflated pricing by a seller.
10. Don’t choose the cheapest agent! This may seem counter intuitive but it is true. Let’s go back to the first example. If the other agent got $8,000 less on a $250,000 home but charged 1% less, the seller is still losing $5500 in the transaction. Also keep in mind that if the agent was successful enough to charge more, they probably would. Would you pick your attorney or doctor based on the price or their skill? Sound like a stretch? For most of you the sale of your home represents the larges single asset that you have, place it in the hands of a professional to care for your interests