How to Overpay for Your Next Home

How to Overpay for Your Next HomeIt all starts with the best intentions. You have a list of all the things you want in a new home, as well as a budget that you’re going to stick to.

Almost invariably, however, home buyers fall into the same trap. They tour a home that meets those original parameters, but it’s slightly above that budget purchase price. The home buyer gets caught up in something they didn’t initially consider but realize they now must have.

The problem is, only so many homes are available with that must-have, which likely means they’re going to overpay to get it. That’s how the free market works.

Overpaying for a home can be disastrous, yet it happens just about every day. If you want to join the ranks and pay more for your next home than you should, here’s how:

Let your eye wander

When people set their must-have lists for a new home, it’s mostly a practical matter. They need this many bedrooms, these many baths, perhaps a finished basement. It’s more of what they had in their last place. For example, a family living in a three-bedroom home will have their lives complete if they could just get four bedrooms.

But temptation sets in, and home buyers see a home that’s slightly above their original price range but has a “man-cave” in the basement. A home that’s 400 square feet bigger than their current dwelling has the perfect tinge of blue in the granite countertops, and now a 600-square-foot-larger home without that blue-specked granite just won’t do.

These shiny objects cause the buyers to stray from their original commitment to spend only so much because they need just so much more. When it comes to home buying, there’s always greener grass, which is also more expensive for home sales.

Ignore the math

If you find a home that fits your original specifications but is missing those new-found desires, consider what it would cost to add them yourself. For example, if the only thing that otherwise perfect home is missing is that man-cave or blue-specked granite, do some research. Find out if you can spend $20,000 less on a similar home and pay $10,000 to bring it up to your (new) standards.

The most significant mistake overpaying home buyers make is to assume that only this one home can have this thing they want. They dismiss the idea that they can add that to an otherwise perfect home for less money.

Go it alone

This point has nothing to do with wandering eyes or amenities you didn’t even know you wanted but for which you now will pay too much. It has to do with people and negotiation.

A listing agent has a responsibility to one party: the seller. They might be super-nice to you, accommodating your every request. Offer to talk to the seller about coming off their asking price. But make no mistake, they’re bound legally to represent only that seller.

And that means the best way for a home buyer to overpay is to try to negotiate a price by themselves, with that super-friendly listing agent legally bound to represent the interests of the seller.

If the home seller has an agent representing them,  why not have a buyer’s agent to serve you and negotiate on your behalf? If you were heading into court, you’d want qualified legal representation, right? So why not get qualified real estate representation to negotiate what might be the most significant purchase of your life?

Homeownership can be great, whether you’re a first-time buyer or moving up from that first home. You know what you want (or thought you did), which is excellent, but it makes no sense to overpay because you don’t recognize what makes you a candidate to pay more than you must.

Don’t be a sucker, that is, unless you want to overpay.

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