The 'RIGHT PRICE' for your home purchase
2013/07/02

"Ever wondered about the process you should follow to establish the price you’re willing to pay for the home you wish to purchase? "

In reality, you probably haven't. You need to purchase a home, you more or less have in the back of your mind the amount you can spend, you know the area you want to look in. So, you jump in your car and go to view houses, only to be very disappointed in the outcome.

So let's look at a technique that takes some of the sting out of the situation.

You need to purchase a home, you have certain specific requirements and an idea of the area. Your first port of call should be a trusted estate agent. They have all the facts and figures and can introduce you to established financial institutions and bond originators and other suppliers such as builders, home maintenance people, etc. They will take you through the whole process of market availability in various areas, deposits, options, transfer duty, legal fees, the transaction period, and any other contingencies you may encounter.

With a good idea of what expenses you are in for, it is a case of checking your budget. Perhaps it can be a cash sale. It might mean you need to sell your current property. Or you might be able to afford a house with a loan, without having to sell your present home first.

With your financial situation simplified, it is always an excellent idea to be pre-qualified as a buyer in any one of the above scenarios. This gives you a head start with regards to price range.

Remember, when purchasing a home you must have a finite figure which you are willing and able to pay for the home of your choice. This will also include a budget for any alterations that may be necessary.

Remember, too, that during transactions your wants might overpower your needs and the price may not be as negotiable as you originally thought. At this point, you will have to bring yourself back to reality and reassess the situation. Is the amount being asked relative to the neighbourhood and to the market cycle at that given period? What alterations or changes are needed and what are the costs? Compare it to other homes for sale in the area; could they be bought cheaper to allow you to spend more on making the home suit your lifestyle?

Your willingness and the property's affordability are the factors that will bring you to the point of making an offer. The offer should fairly reflect current and expected market conditions and should be reasonable. You do not want to open the door to negotiation and you do not want to insult the seller who was advised on the market price at which he has listed his home. A seller can only expect that negotiations will take place if he has insisted on listing his home at a higher than average market price. Walk away if the seller is unreasonable.

Your offer to purchase is an all important document. It states exactly how you are going to pay for the house. A large deposit with no 'subject to' clauses can effectively impact on the acceptance of a lower offer.

The usual deposit requirement is between 10% and 30% of the sale price. Thereafter, the balance of the funds may come from a savings account and/or a bond and/or the sale of another property.

The offer may even include requests for an inspection of the house or certain land reports. A feasible period for all this to be accomplished must be stated in the offer for consideration by the seller. This may well affect the sale, but you will be adhering to your determination to pay what you are willing and able to afford.

On receipt of the offer, the seller may respond with a counter offer - maybe requiring a higher amount, or stating that he is not prepared to pay for certain reports, etc. It is then up to you to assess the situation, based on the advice you receive from your real estate agent. If the counter-offer is reasonable and if it is still within your range, you should have no problem in agreeing to the terms.

Once both you and the seller have finalized the terms of the offer, lawyers will ensure that all requests are followed through in the specified periods of time, and that guarantees from financial institutions are issued.

There you are - it's a very simple procedure that takes the emotion out of the deal and allows you to work within your financial framework and establish the 'right price' for your next property.

Realty King IPG

Author Unknown