Be Careful of what you Wish for, Cuz you just Might Get it All
What comes to mind? Daughtry? American Idol? Nope. It’s the housing market.
It’s no surprise. It’s a buyers market. The question is not whether or not you can get a great deal–the real question is what to really ask for from the sellers. Most buyers are focused on the actual offer price they are making for their new home. Don’t get me wrong, a dollar saved is a dollar earned, but as any veteran homeowner will tell you, the sales price of your home is only the beginning of the costs associated with taking part in the American dream. Taking a few moments to be creative with your negotiations now, can make a real difference for you, years after you’ve purchased the home.
For example, is this your dream home, except for the LP siding? That siding will eventually need to be changed, and you can typically pay anywhere from $5,000 to $30,000 down the road to replace it–have you taken that into consideration? Use one of several commercial siding company’s websites such as Siding4U to quickly estimate the cost of LP replacement, and ask the buyers to cover this cost as part of the sale. Better yet, have them complete the repair as part of the house closing process.
How about those monthly payments on the new home? Check with your local bank or try the CNN mortgage calculator to estimate your monthly payments. If that monthly number makes you nervous, you can often work with the seller to have them buy down your mortgage interest rate, either as a permanent interest reduction on your loan, or as a shorter term subsidy, such as a 2-1 buydown option. In a 2-1 buydown the seller provides your lender with 3% of the loan amount in the form of an up-front payment. In return, the bank lowers your monthly payments for the first two years of your loan. This is different from the infamous Ajustable Rate Mortgage (ARM); you get the benefit of lower payments in your first two years but it also gives you a predictable fixed payment for the remainder of the loan period. You can learn more about this loan type at Mortgage 101.
Finally, don’t forget commercial home warranty programs, available from numerous companies. These warranties can be purchased by the seller and they provide you, the buyer, with peace of mind that any major unexpected repairs (such as a failing water heater or leaking dish washer) will be covered for the term of the warranty.
Ultimately, you want your purchase to be a positive, stress free experience. Taking the time up front to creatively work with the seller can make a huge difference in your new investment for years to come.
