So how do you make sure you get the absolutely best deal when buying a home? In this episode, we discuss how to get the best deal on your next home purchase. We look at shopping for mortgage rates, understanding the market and how to negotiate when buying. We also explore key elements that impact getting the best deal such your savings, home type, upgrades, and timeframe to purchase.
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Hi everyone, I'm Karl. Welcome to another Homebuyer's School video, a channel where you get the latest strategies, tactics, and tips from home buying experts. And remember, if this is your first time on this channel and you want to get the latest strategies from the experts, [00:00:30] hit the subscription button below. Hit the little notification bell so you don't miss anything.
So today I'm joined by Kevin French, Realtor with RE/MAX. And the question we're gonna answer today is
How do I get the best deal when buying a house?
So Kevin, how do I get that?
So there's a handful of avenues.
1. Shop for the best mortgage rate
First, financially you're going to typically have a mortgage on the property. When you have a mortgage, you're going to want to shop for the best rate.
I would encourage people to work with a mortgage broker.
You can work with a mortgage specialist at [00:01:00] the bank specifically, however, often they don't voluntarily give you the best rate.
So having a mortgage broker, they can work with a numerous different lenders and then shop those lenders to get... It's more competitive and then you're more likely to get a better rate, save on that.
2. Understand the market
And then, understanding the market that you're purchasing within.
So if you're buying a brand new property, understanding the new competition in the area.
Obviously, you should just be comparing primarily to that.
And then if you're purchasing resale, again, understanding the competition in the area so that you're not overpaying.
3. Negotiate best deal
[00:01:30] From there, you're going to want to negotiate the best deal possible, so that's understanding what the negatives are about the property, whether it's location, that condition, a combination of that and a handful of other things.
And then you're going to comprise a list, understand as much as you can, understand the position as to why the the home is being sold, and then use that to your advantage,
And then negotiate down on the price from there.
So let's go right back to, I guess, choosing your mortgage broker or choosing a realtor. [00:02:00] I'm sure that could have a significant impact in terms of getting the best deal in buying house, right. Obviously choosing the right realtor and obviously choosing the right mortgage professional.
Yeah. Yeah, there's a handful of different tactics the different mortgage, or sorry, realtors use, one purchasing a property and their negotiation.
How experienced somebody is will typically work well with their negotiation skills.
If somebody doesn't sell a lot of real estate or they do it [00:02:30] part time, they usually don't have a stronger understanding of how to go about it.
And then understanding the market that the buyer's purchasing within, understanding the community, and then working with that.
If it has negatives for the property that aren't seen as a negative for the buyer, then the agent can work with those facts and then negotiate a better price.
And I know you mentioned comparing mortgage rates, and if you want to know more about comparing mortgage rates, where we actually talked to a mortgage professional, check our video above and the description below.
[00:03:00] So let's talk about savings. Like,
How does your savings impact the best deal when you're buying a house?
I guess like, would you get a better deal if you've saved just 5% down or 20% down? Does that impact?
Yeah, so if you put 5% down, anything less than 20% you're going to pay insurance premiums.
The insurance premiums go in 5% increments, so 5% down, obviously the minimum, you have to pay the insurance premium, I believe it's just around 4%, so [00:03:30] essentially, you're putting down 1%.
If you put down 10% then that drops to I believe 3.15%, and if you put down 15 it's 2.85%, and then if you put down 20 then that insurance premium just disappears.
So obviously significant savings, it depends on the price of the property, but not paying that premium is a pretty big advantage.
New home vs resale
And let's look at the difference between buying a new home build and a resale home.
So for resale home, I think you have to actually think about, is it a fixer upper or is it like, you can actually, it's just ready [00:04:00] to move into and you can live for the next five, 10 years, right?
Factor that in, and there is the opportunity as well to do a purchase plus improvements mortgage.
So if you did want to buy a property that needs some light improvements, that would increase the value, you could look at that, the lender would give you financing for that.
Karl Yeh: Oh, okay.
So they give you financing for the improvements, typically up to $40,000 to $60,000 is where it's capped at.
You can't renovate the entire property with that budget usually, but it gives you the opportunity to maybe redo the kitchen or redo the roof and the windows if those are important things that need to [00:04:30] be done.
Home upgrades and getting the best deal
Okay, and let's look about a new home build.
How about the upgrades? How do you factor that into getting the best deal for the home?
Yeah. Builders often, of course, if they charge you, you know, $5,000 for granite, they don't pay $5,000 for that granite.
They got, you know, bigger contracts and they get it at better rates.
So that might be a way to get some things included in the home that are luxuries or added on add ons that the buyer wants, [00:05:00] but then the builder can give it to them because it's less of a cost.
Although it's perceived as $20,000 in value, for example, to the buyer, the reality is that the cost might be a lot less than that, so the builder might be more willing to negotiate on something like that rather than directly off the price of the property.
And remember, if you want to know more about choosing the best home upgrades for resale, check out her video above and the description below.
Best time of year to buy?
How about off peak or times in the year? Does that impact being able to get the best deal?
Like is it better to maybe buy [00:05:30] in the winter when less people are buying, or I know, like sometimes the spring or the fall is a great time to buy, but when no one's buying, maybe in the summer.
Yeah, the best time to sell is going to be the spring and the fall.
Best time to buy, there's also more opportunities in the spring and the fall, so there's more options to choose from, so that has its advantages.
Of course, in the winter, when there's less activity, the properties stay on the market for longer periods of time, you might be able to take advantage of something there if the seller is motivated or highly motivated to sell. [00:06:00] But a negative side to that too, is you can't properly inspect the property if it's covered in snow-
Karl Yeh: Right, yeah.
You can't see the backyard. There's a lot of things that you don't get to fully understand about the property when you're purchasing it, so there's downsides to it, but if you catch the right buyer at the, or sorry, at the right seller at the right time, there might be a better opportunity.
And how about basements, I've heard a lot about, should at home come with a basement, does it increase the value? Does that impact on, how to, getting the best deal for the home?
Basements are one of those things that are [00:06:30] often done for the home owner, so if you're going to develop your basement it's for your benefit, don't expect to make money on it when you sell. If you hire a contractor, of course those ranges can vary on the cost.
Typically, you're going to break even or lose some money. If you're very thrifty and you have friends and family that can help, or you can do some of the work yourself. I would encourage you to always permit it of course, and then when the work is done, you could make a bit.
But, usually on the whole you're doing the the basement for yourself, or [00:07:00] if it costs you $20,000 you're going to see a $20,000 gain in the property.
It does make the property more attractive on the market though.
If someone... If it has a bedroom and a bathroom, that's key, but if it has a bedroom and a bathroom and the neighboring property is, maybe you can be $15,000 under them-
And you have that and they don't, it's going to give you an edge.
Negotiate closing costs
Got it, got it. And then, finally, is there a way to negotiate? I know there's lots of ways to negotiate for the price of the home, but is there a way to negotiate, maybe closing costs?
Not [00:07:30] as common, but I guess you could.
Anything's negotiable, of course, in the sale of the property.
An interesting negotiation tactic, for example, that we're seeing more of right now, it depends on the agent and their experience with it, but it's asking the listing agent or the seller essentially to send a reverse offer.
So instead of you submitting an offer asking to buy the property, they're at 500 you offer for 470, and then you negotiate down from there.
You say, "Well, if you're telling me that you're motivated, send me a reverse offer, send me an offer that's under your list price [00:08:00] and we'll negotiate up from my number instead of it down from their number." Gives gives the buyer a little more control.
Great. Do you have any more tips in terms of getting the best deal when buying house?
Stick with facts, not emotion, and offer a realistic price initially to set the bar. Obviously, that price, you're going to be expected to increase from it, as they're going to be expected to decrease from theirs, but don't go in with an insulting offer.
Whether we want to or not, it brings [00:08:30] in emotion from the sellers side, that typically starts off on a negative footing.
If you bring in a realistic offer that's with sound facts, and stick with your reasoning, your logic behind it, keep drilling that into them and then eventually the sellers will understand where you're coming from, and understand why they should accept that offer.
Question of the day
Great. So the question of the day I have for you is:
Did you get the best deal or did you think you get the best deal on your home purchase?And if so, how?
Let us know in the comments section below. And if [00:09:00] you want to know more about negotiating the price of your home check out this video, as well as our other homebuying videos here.
And don't forget to hit the subscribe button to ensure you get information straight from home buying experts. Thanks for watching and we'll catch your next video.
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About Kevin French:
Kevin French is a Calgary and area based realtor with a client focus. He specializes in a stress free home selling process that is built on customer service. Understanding that your home is one of your largest investments, Kevin employs a marketing mix that ensures you will maximize returns on your home sale. Diligent market research coupled with an in-depth understanding of the Calgary and area markets, allows Kevin to pinpoint the perfect price for your home.
In addition to perfect pricing, Kevin offers a suite of additional services such as professional photography and an interior designer to ensure your home shows its best. Kevin French has become a trusted name in real estate because he is results driven and works closely with his clients to produce the best results.