How to Save 10% or More When Buying a House
For most people, the buying their house is by far the biggest investment they will ever make. Most people also think of themselves as bargain hunters, able to find a good deal on any purchase they make.
However, when purchasing a home, most people follow a path that leads to them paying full retail value for their home. You know how it’s done.
You find a Realtor to show you the houses on the Multiple Listing Service, look at several houses with them and then make an offer on the house that you like the most in your price range. Most of the time, at your Realtor’s suggestion, that offer will be within 8-10% of the asking price, which was likely set at the appraised value of the home.
If you’re lucky, that price is accepted. If you’re not lucky, the owner will haggle with you over the price with counteroffer after counteroffer.
If you’re doing any quick math, you realize that you will very rarely, if ever, get a true bargain when you buy your home following this formula. You need to do something far different in order to become a real estate bargain hunter.
The Real Estate Bargain Hunter’s Dilemma
Many people, after looking at several homes with their Realtor, begin to despair that they will never find the house they want for a price they can afford. If you’re one of those people, or if you just don’t like to pay retail price for anything, read on for some great tips on how to buy real estate at a minimum of 10% below it’s “retail” price.
Now that you understand how NOT to buy a bargain property, let’s look at a few simple things you can do to maximize your dollars when buying real estate.
Working With Realtors
First, let’s assume that you are already connected with a Realtor. That is not a bad thing. A real estate agent is essential in some transactions and that is why we own our own realty firm in Murray, Kentucky called Cornerstone Realty and Rental.
If you are connected with a Realtor, you need to do your own research on what constitutes a reasonable price for the type of home you want in your area. You can check your county assessor’s office and your county clerk’s office to see what the homes you are interested in are valued at.
Many people have deed and property valuation information online at places such as http://netronline.com/ I highly recommend becoming acquainted with your county clerk and assessor’s office employees, because they can really help you find out what properties have been selling for outside the normal realty channels.
Once you know what is truly a reasonable price, remember that you are in control of the transaction, NOT your Realtor. It is going to be your name on the Deed and on the loan and you need to be comfortable with what you are paying for the property.
With that in mind, don’t ever be afraid to make a low offer. In order to get a 10-20% discount on the property, you are going to have to make more than one offer. Most people don’t want to give that much of a discount and they already have commissions coming out of their pocket.
Therefore you should be aware that you will have to be patient. If the true value of a property is $100,000, perhaps only 1 in 10 people are motivated enough to sell it to you for $80,000. However, if you make 10 offers and spend an additional 10 hours looking at the properties, is it worth $20,000 to you? How about $10,000? I know that I would spend an additional 10 hours looking at real estate to get a wholesale price instead of a retail price EVERY TIME.
Dealing With Property For Sale By Owner
Much of the time, the best deals come from people who are selling properties by themselves. They seem to have a little more motivation to sell and they definitely have more room to negotiate because the have no commission to pay.
When dealing with real estate for sale by owner, the key is to find out what the seller needs. Find out what his or her hot button issues are and meet that need above all others. If the person needs to sell quickly, make sure you let them know that you can close in 2 weeks if necessary. That will make your offer that much more attractive.
My favorite thing about working with owners who are selling by themselves is that you get to interact with the seller face to face. You can develop tremendous rapport with a person in only a short period of time.
If you are a genuinely kind person and take a true interest in the seller, oftentimes the seller would rather sell to you than someone they don’t know. Simply being a good human being can oftentimes get you a discount of several percent.
Dealing With Real Estate Investors
The last option when seeking to get a bargain deal on real estate is to deal with real estate investors.
Many times real estate investors have acquired property at 30% or more below market value and they can afford to give you a 15-20% discount off the “retail” price if you can just close quickly and cash them out. Other times, real estate investors have held their properties for a long period of time either as rental property or as fix and flip property and they just need to get the house sold so they can move on to the next property.
Regardless of WHY they want to sell, real estate investors are often the best place to start when looking for properties below market value. Most of the time, the investor can show you what the true market value of the property is and is willing to discount that figure substantially right off the bat.
When that happens, just be honest about what you can pay and, if the property works for you, often you can make a deal happen. Let’s take a case study from a house that I recently personally sold:
3 BR, 2 BA House
Retail Value - $90,000
Sale Price - $75,000
Savings - $15,000 or a 16.67% discount off retail price
We were able to sell this house at that price because we had negotiated an even lower price and just wanted somebody to quickly cash us out. There are tons of real estate investors all over the country who can provide the same service.
The first thing to do would be to try to find a real estate investor in your area. Look for “We Buy Houses” signs or other advertisements from people who buy houses. After all, people who buy houses must sell houses as well.
You can also run Google searches for investment property, wholesale real estate, or rental property in your area and see if you have any investors advertising on the web. Lastly, local real estate investment clubs are a great resource for finding real estate investors who might be able to pass along discounted real estate to you.
If you search for real estate investment clubs in your area, you are likely to find multiple people with properties in your area and price range. For instance, here in Murray, we have the Western Kentucky Real Estate Investment Association.
We have a group of 20-30 investors who invest in real estate, from single family homes to commercial property. At any one time, our members might have 50 properties or more for sale in a variety of areas in Western Kentucky, from Murray to Mayfield to Benton to Paducah. That really increases your chances of finding the perfect property.
Conclusion
I hope that this article has helped you understand a little bit more about what you need to do to buy your next home at a substantial discount. Why pay retail price if you don’t have to?
You CAN find that bargain property with a little work and the knowledge of where to look, so don’t let the naysayers keep you from finding YOUR dream home at YOUR dream price.
About the Author: Greg Taylor is President of Creative Property Solutions, Inc. in Murray, Kentucky. Creative Property Solutions, Inc. is a real estate investment company that buys and sells houses throughout Western Kentucky and even some in West Tennessee.
Greg is also the founder and President of the Western Kentucky Real Estate Investment Association, which is a networking and education group for investors in the Western Kentucky area. For more information about Greg, Creative Property Solutions, Inc. or the Western Kentucky REIA, please call Greg at 270-761-HOME or visit him online at http://wkyrealestatedeals.com or http://creativepropertysolvers.com.
If you are interested in purchasing below market or wholesale real estate in the Western Kentucky or West Tennessee area, please visit http://wkyhomeseller.com.
Do you hear that jingly sound? That's the sound of money in YOUR pocket! We've got another great property far below what you'd get on the retail real estate market.
Take a look at this beautiful property that we have for sale in Puryear, TN. 3 BR, 1 full bath, 2 half baths, 1400+ Square Feet. Handicapped accessible brick home on a double lot in a quiet Puryear neighborhood.
What a value, we're pricing it at $55,000 and tax value is $66,100! See the video of this home and tell me you're not impressed!
Call me at 270-761-4663 or visit us at www.wkyrealestatedeals.com if you're interested in this beautiful property, but make it quick because I won't have it long.
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I am a Real Estate Attorney and President of Creative Property Solutions, Inc. in Murray, KY. We are investors who buy houses, provide rental property, and assist homeowners in foreclosure.
Creative Property Solutions, Inc. is a full-service real estate company based in Murray, Kentucky. We are a Christian owned and operated company and our business is based on the principles of honesty, fairness, and compassion taught by Jesus Christ. We want to make a difference in the lives of people in which we come in contact with. Our vision is to treat each and every person with fairness, honesty, trust and most of all integrity.
We buy, renovate, rent and sell residential properties, from single-family homes to larger multi-unit apartment complexes. We seek undervalued properties or uniquely situated property owners that offer the opportunity to create value and help people.
We solve people's real estate challenges – from pending foreclosure to problem properties -- using creative approaches and advanced financing techniques. Call us today and let our team help you with your property challenges.
(270) 761-HOME
Meet the CPS team:
President Greg Taylor with wife, Kristin and daughter, Cate
Vice President Gary Taylor with wife, Peggy
HOW WE CAN HELP YOU STOP FORECLOSURE
Is a lender preparing to foreclose on your home and destroy your credit for the next seven years?
Call now for a free consultation to see if we can help you keep your home and avoid foreclosure. There are many solutions available -- you do have choices! Your options include the following:
• Forbearance Agreement - Lenders are willing in some instances to set up a payment plan for back payments owed on your mortgage. If this is the case for you, we will set up that plan for you.
• Equity Sharing Program - If you have equity in your home, CPS will work with you to bring your payments current and sell your home, thereby saving your credit.
• Short Sale Program - Often people find that what is owed on their property is greater than the amount for which it can be sold. If this happens to you, we will work with your lender to take less than what is owed to pay off the property.
• If you decide to sell, CPS has access to a group of investors willing to buy your house fast to keep the foreclosure off of your record. Such a sale can free you from the burden of facing a foreclosure. In some instances, because we often have several homes available for sale, we can help you sell your house and help you buy another home immediately.
The best advice we can give you is ACT NOW! Many people facing foreclosure simply do nothing and hope for a miracle. Don't fall into that trap! The longer you wait, the more difficult it is to save your home and your credit.
Some homeowners seek advice from a lawyer and file for bankruptcy thinking that will solve all their problems. In most cases, bankruptcy only delays the foreclosure by a few months at best. The end result is almost always the property still goes to auction and you now have a bankruptcy in addition to the foreclosure on your credit report -- both of which can make it hard for you to get credit for a car or another home for seven to ten years.
In some cases, the best thing for a homeowner to do when in foreclosure (assuming the homeowner's loss of income is not temporary), is to SELL THE PROPERTY! By selling, you will avoid having a foreclosure and possibly a bankruptcy on your credit report. You can now get on with your life!
If Equity Sharing is your best option, we can bring your payments current and even give you equity back out of your home. Also, because we have a constant inventory of houses, we can often help you move into another home with a fresh start. We can even help in most situations where there is no equity in the house through our Short Sale program.
I'm sure you have been contacted by other investors, especially if the foreclosure has gone public. Unlike other investors, we will not try to take advantage of your unfortunate situation. We simply figure out a mutually beneficial solution so you can move on with your life! You don't have to give away the equity that you worked so hard to earn.
If your house payments are more than a month or two behind, your lender has probably already started foreclosure proceedings. As time passes, thousands of dollars in penalties and legal fees can be added to the balance you owe. And every single day extra interest is added! The longer you wait, the harder it is for us to help you. To avoid this you must act quickly.
CALL TODAY for a no obligation consultation on how we can help you get cash out of your house and save your credit before it is too late.
HOW WE CAN HELP YOU STOP FORECLOSURE
Is a lender preparing to foreclose on your home and destroy your credit for the next seven years?
Call now for a free consultation to see if we can help you keep your home and avoid foreclosure. There are many solutions available -- you do have choices! Your options include the following:
• Forbearance Agreement - Lenders are willing in some instances to set up a payment plan for back payments owed on your mortgage. If this is the case for you, we will set up that plan for you.
• Equity Sharing Program - If you have equity in your home, CPS will work with you to bring your payments current and sell your home, thereby saving your credit.
• Short Sale Program - Often people find that what is owed on their property is greater than the amount for which it can be sold. If this happens to you, we will work with your lender to take less than what is owed to pay off the property.
• If you decide to sell, CPS has access to a group of investors willing to buy your house fast to keep the foreclosure off of your record. Such a sale can free you from the burden of facing a foreclosure. In some instances, because we often have several homes available for sale, we can help you sell your house and help you buy another home immediately.
The best advice we can give you is ACT NOW! Many people facing foreclosure simply do nothing and hope for a miracle. Don't fall into that trap! The longer you wait, the more difficult it is to save your home and your credit.
Some homeowners seek advice from a lawyer and file for bankruptcy thinking that will solve all their problems. In most cases, bankruptcy only delays the foreclosure by a few months at best. The end result is almost always the property still goes to auction and you now have a bankruptcy in addition to the foreclosure on your credit report -- both of which can make it hard for you to get credit for a car or another home for seven to ten years.
In some cases, the best thing for a homeowner to do when in foreclosure (assuming the homeowner's loss of income is not temporary), is to SELL THE PROPERTY! By selling, you will avoid having a foreclosure and possibly a bankruptcy on your credit report. You can now get on with your life!
If Equity Sharing is your best option, we can bring your payments current and even give you equity back out of your home. Also, because we have a constant inventory of houses, we can often help you move into another home with a fresh start. We can even help in most situations where there is no equity in the house through our Short Sale program.
I'm sure you have been contacted by other investors, especially if the foreclosure has gone public. Unlike other investors, we will not try to take advantage of your unfortunate situation. We simply figure out a mutually beneficial solution so you can move on with your life! You don't have to give away the equity that you worked so hard to earn.
If your house payments are more than a month or two behind, your lender has probably already started foreclosure proceedings. As time passes, thousands of dollars in penalties and legal fees can be added to the balance you owe. And every single day extra interest is added! The longer you wait, the harder it is for us to help you. To avoid this you must act quickly.
CALL TODAY for a no obligation consultation on how we can help you get cash out of your house and save your credit before it is too late.
Stop Renting - Own Now!
Are you currently renting but would rather OWN YOUR OWN HOME?
CPS has several different options that will allow you to do just that. With our owner-financing or rent-to-own programs, you can build your credit and build equity in your own home WITHOUT having to qualify at a bank.
THE OWNER-FINANCING PROGRAM
Owner-Financing Basics
Owner-financing is simply where you buy the property from us under a
private contract and we act as a financial institution, just like a bank. If you have a
10% to 15% down payment, you can get the property without going through the
traditional qualifying and loan approval process.
We will give you a residential lease with the option to purchase the property at a
specified price at any time during the lease period. Each payment you make will
reduce the principle which you owe us, just like a standard mortgage amortized
over 15 or 30 years. However, unlike banks we are not in business of providing permanent financing, so we can finance you only for a short term, to help you jump from renting into home-ownership.
Any payment quotes we make would be based on a 30 year amortization schedule,
but Owner Financing arrangement would be for 1-5 years. At the end of that term
you will have to obtain a replacement loan from a traditional lender. And again at
that point you would go for a "refinancing" loan, which should be easier & less
costly to get than a "new purchase" loan, assuming you kept your credit straight
and made payments on time.
Frequently Asked Questions:
1. Where do I make my payments? Make all checks out to CPS, Inc. and mail all
payments to P.O. Box 1327, Murray, KY 42071.
2. What closing costs, fees and points should I expect to pay? CPS, Inc. charges a loan processing fee of $100.00, a document preparation fee of $150.00, a credit check fee of $20.00, and an origination fee of 1% of the loan value for handling the owner-financing transaction. However, all owner-financing fees are wrapped into your loan, so the only out-of-pocket money you will need to pay will be the down payment. Also, you will need to pay for the 1st year insurance premium to have the home insured against damages. As you can see your total closing costs are a few hundred dollars, so you're not wasting thousands of dollars like in a traditional purchase.
3. Is there a prepayment penalty? No, you may pay this loan off at any time with
no penalty.
4. What interest rate will I be charged? Depending on your credit score and other
indicators of creditworthiness, CPS will charge from 4.5% to 8.5% above prime
rate. With prime rate at 7.75%, the rates would be between 12.25% and 16.25%.
5. What if I have 15% or more to put down? With a higher down payment we can
finance you at lower interest rates.
6. What if I don't have 10% down payment? Our minimum down payment is
10%, but if you have other collateral we will work with you to help you become a
home-owner.
7. How quickly can I get approved and move into the house? Typically within 2-3 business days.
8. Do you do a credit check and what happens if I have a bankruptcy or other
credit problems? Yes, credit check is done in most cases. But things like
bankruptcies, collections, being turned down for a bank loan or other credit
problems are no concern to us in regard to getting you in one of our homes. We
want to be familiar with your credit issues so we can better guide you to repairing
your credit.
If your credit is extremely bad, you can still get approved but we may require you to
pay a slightly larger down payment.
9. What happens if I don’t qualify for a bank loan at the end of the term?
If, during the term of the agreement, you were late on your payments, or other
credit accounts, if you incurred additional debt, or jeopardized your loan in some
other way, you were not making a serious effort to get ready for the purchase.
Therefore, we won't give you a second chance.
If, however, you were on time and did everything you could, but still could not get
financing, we will give you another opportunity. The price and terms may change,
but we won't force you to move out.
THE RENT-TO-OWN PROGRAM
Our Rent-To-Own Program can help you own your own home in ONLY 12-24 months. When Banks & Mortgage Companies say NO, we say YES! Here’s how to Tell Your Landlord Goodbye!
Lease, by making 12-24 monthly on-time lease payments. This will establish your credit, or clean up any credit issues that you may have. These payments must be timely and consistent for the program to work.
Step 3At the end of 12-24 months we will help you arrange financing through a Financial Lending Institution (Bank or Mortgage Company). They will finance your loan with proof of on-time payments.
Step 4Now, you’re able to purchase YOUR home.
Example: $90,000.00 Purchase Price
- $4,500.00 Option Fee (Becomes your Down Payment)
$85,500.00 Balance Financed
*If you follow through and purchase the home, your Option Fee becomes your down payment.
*Upon Refinancing your monthly payments should decrease
*Option Fee is non-refundable and is forfeited if the home is not purchased.
© 2007 Creative Property Solutions, Inc. All Rights Reserved.
Web services provided by Kentucky Lake Productions, LLC.
TESTIMONIALS
See what other people in your situation have to say about CPS:
"We were facing foreclosure and CPS kept us from losing our home of 16 years. We would recommend CPS to anyone in our situation."
Paul and Elaine from Murray, Kentucky, April 17, 2007
"I was having health problems, money problems, and my husband had been out of work 4 times in the last 10 years. CPS really helped me. They made my house problems go away and now my name is clear. They made it possible for me to get back on my feet. I would positively recommend them. They were a blessing to me."
Debbie from Murray, Kentucky, April 26, 2007
"I was off of work under the Family Medical Leave Act, and I certainly appreciated the disability check I was receiving. However, it did not cover all my bills. I became grossly behind on my house payment to the point of foreclosure.
Greg Taylor of CPS was very polite and easy to contact. He was happy and eager to help me. He went to great lengths to try to purchase my house on such short notice, and by the grace of God I was given a second financial chance and was able to keep my home.
I would always recommend CPS to anyone who wants to sell their house, whether they're in foreclosure or not!"
Donna from Paris, TN, May 31, 2007
"We had been trying to sell our house for about a year, and we were falling behind on our mortgage payments. CPS purchased our house from the bank, and within 1.5 months we were out of a bad situation. Anyone who is having trouble selling their house I would definitely recommend contact CPS."
C.J. and Melissa from Murray, Kentucky, February 8, 2008
"I was hospitalized about 2 years ago. My credit was ruined and I couldn't pay all of my bills. I was about to lose my house to foreclosure. CPS bought my home, helped me get back on my feet with the money and helped to fix my credit. Thanks CPS!"
Daniel from Paducah, Kentucky, February 11, 2008
"We were given the run around by Crown Mortgage and had gotten behind on everything. We were trying to start our company and could not because of a bad cash flow problem, caused by trusting the wrong people. CPS helped us solve our problems by getting us the money we needed. We got our trucking company started and now things are looking up.
I would recommend anyone call CPS. Greg comes from a kind, caring, loving family. All the Taylors' word is their bond. I know that Greg's grandfather Tommye is the greatest man I know. I think if you needed a shirt he would give you the shirt off his back and I know Greg is the same."
Danny and Teresa from Murray, Kentucky, September 2007
"We were behind on our payments and we couldn't seem to stay caught up to to where our payments were current. We had no way to save for any kind of emergency. There were home repairs that we needed doing that we could not afford.
CPS helped us solve our problems. The got our home listed with a realtor and contacted our mortgage company and made all the arrangements. All we had to do was sign at closing when the house sold.
We would very much recommend CPS. They made it easy for us and took a load of stress and worry away. Thank You CPS!"
Mac and Emily from Murray, KY, February 26, 2008
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