Saving our clients’ money on a real estate transaction is one of our favorite parts of this job. Here are 5 ways we help our clients save money when buying, selling, or investing in real estate.
1. Loan Buydowns
The borrower pays the lender more money so that they can get a better rate. This is called a “buydown.” This can be done in different ways. You can just pay points, which means giving the lender money to get a lower interest rate, to lower your mortgage. There is also a 2-1 or 3-2-1 buydown. A 2-1 buydown is a type of mortgage financing in which the borrower pays a lower interest rate for the first two years of the loan and then the interest rate goes up to a set level for the rest of the loan term.
During the first two years of the loan, the borrower pays less each month than they would with a traditional mortgage because the interest rate is lower. After two years, however, the interest rate goes up, and the borrower has to pay more each month to cover the extra interest costs.
People are taking advantage of these buydowns because they hope that rates will go down a lot in the next two years, allowing them to refinance. Also, buyers are using the current market to their advantage by making the sellers pay for the 2-1 buydown. This is a great way to save money when you make a purchase.
2. Writing in the Price Drop
This is something we practice with all of our best clients. If our clients have a $1,000,000 budget, we will go look at properties just over $1,000,000 that have been stale on the market, show them to our clients, and if they like them, we will write an offer at what we think the price drop will be. The goal is to write the offer before the price drops so you have no competition and are able to catch the seller at a weak moment when they need to make the decision to change the price of their home. On the other hand, if you wait until after the price has dropped, the sellers have reset their clock and are not going to entertain any low offers until some time has passed.
3. Your home should be model home ready
This is for sellers, and we discuss this what seems like EVERY WEEK, but this is THAT important in the current market. Sellers should make sure that their home looks like a model home. What does that look like? beautifully staged, immaculately clean, white walls, no personal elements, etc. Spending the money up front to make your home beautiful results in a shorter time on the market and selling for a better price. The basics to do are paint the walls, replace the carpet, and stage the home.
If you are looking to do a more in depth remodel, we recommend you do these in order of importance – kitchen, flooring, and primary bathroom. Those are the three places where you should spend money to make sure you get the biggest return on investment. Make sure you discuss this with a professional who understands home values before and after a remodel.
4. Work Behind the Scenes
This is a job for YOUR real estate professional, not YOU! If you are thinking of making a move, get your agent to start working behind the scenes sooner rather than later. The perk of working with a real estate agent is that you do not have to pay them until your deal closes, so you are not being billed for this time. Whether you are a buyer or seller, don’t reach out to your agent a week before you are ready to move. Reach out six months to a year ahead of time to let them know your plan and budget. This allows your agent to start looking at off-market properties or prep your home for sale instead of rushing the process.
5. Assumable Mortgage
This one is a little bit more complicated, but we will put it in the simplest terms. With an assumable mortgage, the buyer can buy a home by taking over the mortgage loan from the seller. One reason people decide to buy a home with an assumable mortgage is to take advantage of a lower interest rate if rates have gone up since the seller bought the home. You will want to call your lender to see if your loan is assumable.
These are the top 5 ways we are helping our clients save money! Make sure you are working with a real estate professional, and if you need to connect with one, we are always here to help.
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