« « The Risks Involved in Buying an REO

Bidding Low for Bargain Buys

Let’s face it—homes are expensive, very expensive. These days, experiencing sticker shock when looking to buy is not uncommon.

One way to make a home more affordable is to cut the price—to pay less than the seller is asking. For each $10,000 less in price you pay on a home when interest rates are running at 7 percent, you will save yourself about $75 a month (principal, interest, taxes, and insurance). Cut the price by $40,000 and you’ve reduced your monthly payment by approximately $300. That could be the difference between being able to afford the property . . . and not.

Of course, that’s not to mention the cuts you’ll also have made in your down payment and closing costs, most of which are calculated as a percentage of the purchase price. As a renter looking to buy, getting a price reduction should be one of your main goals.

Further, when you pay less, you increase the likelihood of making a profit when you later resell. Nothing makes more sense than buying low and eventually selling high.

As a buyer, it’s a good practice to not simply always offer the asking price. Consider offering less . . . sometimes much less. You might “steal” the property and end up with very low payments and little cash invested.

But how do you arrange to pay less for a house? If the seller is asking $500,000 for the property, how do you negotiate that price down to $475,000? Or even $450,000? Or $350,000?

In this chapter we’re going to look at some of the techniques used to get a better price when you buy. They can benefit any buyer at any time.

Speak Your Mind

*


*