The moment you decide to buy a property you have entered the real estate market place! To buy that house you need to have set up your finances in order that you be able to pay your current expenses as well as any other expenses that are incurred at the new location. During the time that you will be owning the future property whether you are buying it for end use or as an investment, it will be solely your responsibility to pay all the utility bills and all taxes related to the property.
First things first, make sure that you take a good and long look at the market before buying. You want to have comparisons before making an offer for a house. Having comparisons means that you can then weight one investment against the other. Some buyers with lesser money to invest may choose to buy a house that needs repairs over a longer period of time. Since the house may be in a bad shape it’s price on the market may be lower than other properties that are in good condition but the trick is to work out what that home will be worth once all the repair and renovation work and all the repair work cost is added up.
Market Value of a House
If you are applying for a loan do remember that the ready-reckoner value (Government value for stamp duty purposes), the market value of a house may differ from the valuation of a house for bank purposes because for a bank all that they are concerned about is whether they will get their money back. The market value of a house is flexible depending upon the changes in the market. For example if there are not many houses for sale in a given area then a house in that area is more valuable because it will be a rarity and something that people will be eager to buy. Houses can also be valuable if they are situated in a great location in your city or have unique features such as a mountain view or a sea view home. On the other hand if there if there is a housing surplus and there are a multitude of choices then it is a buyer’s market and you may get a lesser loan for your house. Another valuation that may differ from other valuations is the valuation for insurance purposes. The insurance company usually bases this on what it would cost to replace the house in the event that the house is destroyed whether by man-made or natural causes. The insurance company can give you their own valuation of the house you are planning to buy so that you know what home insurance can cost you.
Types of Sales
In real estate parlance there are different types of sales. When you buy a property at less than the amount that the seller owes to the bank it is called a Short Sale. In a situation like this the bank may have given up on ever recovering back the amount owed and may agree to let the seller sell the house to pay off the bank as much as the house is likely to realize given the prevailing market conditions during the time of the sale. The problem with “short sale” properties is that the property does not turn out to be as great as the buyer expected it to be. There may be expensive repair and renovation work required to be done but purchasers jump in blindly because they feel like they are getting a great bargain basement price.
Bank Auction Properties
These are properties that have been foreclosed upon. The existing owners of these properties cannot afford to pay the mortgage EMI’s and the bank wants back the money that it is owed. Now these type of properties can turn out to be a good bargain if you know the extent of the renovation work that needs to be done and you are aware of the market rates. There are a number of houses that every bank is prepared to sell for the owed amount by a specific date. The advantage of such deadline-based selling is that you get good bargains on some great properties at great locations. The disadvantage is that you will have to get the property professionally inspected in a short window of time and you need to get the financing in place before bidding. The mistake that a lot of people make with such properties is that they bid above their allocated budget and leave less money for repairs.
Sales Through Real Estate Agents
When you are looking at houses with the help of real estate agents like us, you will be shown houses that have been put for sale for a variety of reasons. Maybe the owners are moving to a new city or country. Perhaps they are simply moving to a bigger home. There can be all kinds of reasons that a house comes into the market for sale. The advantage of going through a real estate consultant is that you have more time to investigate and decide upon the value of the home before making an offer. In this case you also have more bargaining power because the real estate agent is acting as the liaison between you and the seller.
In our next informative article we will go through a few more tips that can help buyers navigate the long and arduous journey of buying a new home!