How to get a "good deal" on your home purchase

What does "a good deal" mean to you?

"Good" is a very subjective word. Context is needed. Generally I can consider a good deal to be purchasing a home at most in the thousands below market value, and it takes kind of a unicorn situation for that to happen.

Generally, you don't.

If you're shopping for homes, most likely you are shopping on the MLS. Any homes you find on the MLS are listed by professionals who have at least some idea of the value of the home, and are being marketed to a central repository in such a way that any potential serious buyers for that home are unlikely to miss it. Even homes that are accidentally underpriced will likely have it driven back up by a multiple-offer situation. Due to that, the home is extremely likely to either sell at market value or not sell at all. But sometimes, you do get lucky.

Be Ready.

You need to have all of your ducks in a row such that if and when a property that you consider to be a good deal does happen to appear on the market, you are able to quickly tour it and submit an offer before other buyers get an opportunity. This means primarily having your proof of funds or financing pre-approval in-hand, and your buyer's representation agreement signed, but also being mentally prepared, as in be willing to mentally commit to spending all that fresh cheddar on a home without excessive analysis (you will still have an option period to analyze and negotiate). However, a good agent will insist on sellers keeping their listing active on the market for a least a few days, and over a weekend, to allow at least any current prospective buyers an opportunity to visit the home.

Tour lots of properties. Make lots of offers.

Some properties are poorly marketed, even within the MLS. Some agents may complete the listing inaccurately such that it does not reflect the qualities you're looking for like a pool or a corner lot, or any other filters you may be looking for that your agent added to your search to narrow down potential properties. Some listings have poor quality that don't show the home in it's best light. The home may be excellent quality but the poor photos do not do it justice. Unfortunately some agents list $500k homes the same way they would you might sell a microwave on Facebook.

Also you never know what the seller's motives are. I've experienced several times submitting offers well under market value, but the sellers are so ready to move on that they will accept the first offer that comes along. Buyers submitting low offers is, in my experience, surprisingly uncommon. If you are a client of mine and having trouble finding a home that suits your needs, I'll ask you to lower your expectations, and your price, and let's just start getting some offers out there and see what happens. You may not end up with the home of your dreams but at least you'll end up with a good deal.

Shop during the holiday months

Many people are very busy during the holidays. Traveling, shopping, and making other accommodations for family. Most of them can't be fussed with moving at that time. But if you can, this can be an opportunity.

Mid-Nov through Early-Jan are when we also see the lowest values of the year, when we see the lowest volume of sales, and when we see the least amount of competition for buyers.

New construction.

If you're looking at new construction, generally you can get a good deal at the end of the year (Nov-Dec when builders are trying to meet annual sales goals).

You can also get a good deal on "inventory homes" that are sitting on lots completed and unsold. These are costing the builders money every day so they will be motivated to sell them quickly, and with significant incentives. You'll want to refer back to my other post on phase inspections, as you will miss out on this opportunity if taking this route.

Homes in bad shape.

A situation homeowners sometimes find themselves in is a home that requires significant costs to repair that they themselves cannot afford, but also it is a conundrum, because they also cannot sell the home, because it will need meet a lender's standard of a "livable home" such that a new buyer does not find themselves immediately underwater in a broken home and end up defaulting on the loan.

For example, one thing we find commonly in central Texas is foundation issues. These can cost $10-20k+ to repair, and the seller may have that equity in the home, but the only way to get it out is to sell it, but they can't sell it in it's current state.

There are 2 ways you can turn this into a good deal: The first is if you have sufficient funds to purchase the home in cash and then refinance at a new, higher value. The second is to contact your lender and inquire about a construction loan, which basically means the lender throws some extra cash at you at closing to make the necessary repairs (with many caveats).

Homes you like that others may not.

The best way to get a good deal is to look for homes that appeal to you (or don't bother you) that may not appeal to others. Some people like homes with a dozen different colored walls, 4 types of flooring and decorations smattered across every wall. If that's what you're into, look for that! Because the typical buyer will be dismayed by such things.

Other examples will be homes with less than 3 bedrooms, some kind of weird architecture like a geodesic home, a home with a huge garden that fills the entire backyard, or a home in a location that others may not like, but you do. Ya know, quirky things like that!

DIY

The most popular way to get a good deal is to DIY it. That can mean a variety of things. This often appeals to "real estate investors" who are able to regular get such good deals that they can sometimes build an entire career out of it.

1. Soliciting/advertising sales - Yard signs, Newspaper adverts, etc. "We buy ugly houses"
2. Off-market properties - These can be listed on Facebook classifieds, Facebook "underground" groups, Craigslist, Zillow or any number of other classifieds websites.
3. Writing letters to lots and lots of prospective homeowners asking them if they'd be interested in selling their home.

Conclusion

In short, to get a good deal you'll have to make some sort of sacrifice, whether that be lowering your expectations or putting in some extra time and effort.