3 Genius Ways to Save Money When Buying a New Home
Although a recent homebuilders report conducted by the Bank of America indicated that only 18% of respondents have cited COVID-19 as a catalyst for moving to a new home, the U.S. real estate market is still going strong during the ongoing pandemic. Whether you’re relocating for work, expanding your family, or are finally able to devote some extra time to find a new house, this may be as good a time as any to move.
However, that doesn’t mean you’ll want to spend more than necessary. If you’re like many Americans, budgets are tight right now — so you may be looking for a few clever ways to save. The following tips will help you keep costs low while still ensuring you get the home of your dreams.
Pick the Right Area and Time to Buy
Right now, we’re in a seller’s market. That means that prices aren’t necessarily in favor of the buyer and that competition may be steeper. However, it may be worth buying a home during a time that’s traditionally less busy for real estate (like the winter). You might also look for homes that have been on the market for a while, as current owners may be more willing to negotiate. Finally, look for neighborhoods that are adjacent to up-and-coming areas without actually being located in those areas. You could save a lot on the purchase price while helping your future property values increase.
Examine Your HOA Contract (or Avoid HOAs Entirely)
U.S. homeowners paid around $88 billion in assessments toward community associations in 2016, which just goes to show how common homeowners associations (or HOAs) are nationwide. HOAs can provide a lot of maintenance and amenities, but they may not always be worth the hassle or the cost. If you’ve fallen in love with a home that’s part of an HOA, it’s worth inspecting the HOA contract to determine whether it’s something you can actually afford. And if you’ve just begun the process of finding a home, you may want to steer clear of properties that are part of HOAs. Over time, those monthly costs can really add up.
Prioritize Inspections, Contingency Clauses, and Closing Costs
Your real estate agent’s commission will typically represent 3% to 6% of the home’s sale price. While that can seem like a lot, your agent will do quite a bit of heavy lifting for you. Negotiating with sellers is no easy feat and it’s worth having someone experienced who’s on your side and can fight for what you want. Ensuring an inspection is included in the sales process can keep you from committing to a property with major problems, while factoring in a contingency clause will ensure that if you lose your job or there’s an issue with your loan, you’ll get back some of the money you’ve spent on the home and can free you from your obligation to go through with the purchase. Your agent can also help you negotiate closing costs, which can represent anywhere between 2% and 5% of the home’s purchase price. There are a lot of fees involved in closing costs (which might include lenders, appraisals, titles, attorneys, escrow, interest, inspections, testing, and more) — but you don’t have to accept these fees at face value. You may actually be able to negotiate on some of them to save quite a bit of money.
Saving money on one of the biggest purchases of your life will never be an easy feat — and you can’t expect to get a total bargain. But with these tips in mind, you may be able to save a few thousand dollars and ensure you don’t experience buyer’s remorse once you own your home.