Getting A Great Deal When Buying A Home

A house is usually the most significant purchase a family will make, and it’s worth taking the time to weigh the options and their costs.  However, it is difficult to find a house that besides for meeting your needs, is also affordable.  Brokers who spend their time and energy on the real estate market tend to be the best information resource, and they offered three money-saving tips for home buyers to consider. By being flexible about neighborhoods, open-minded about a property’s look, and aggressive with their purchase offer, buyers may snag a bargain, saving tens of thousands of dollars!

Here’s a closer look at how you can go about trying to find a deal that works for you.

Home Buyer Tip #1 Consider Newer Neighborhoods

Many people prefer to move into the stability of an established area (with shuls and frum neighbors), and this demand causes prices to rise.  By choosing a spot even a few blocks past the concentrated market, you can often get much more for your money. For example, in 2016, when prices in Tallymawr Estates in Toms River were rising quickly, some saw the potential of the adjacent neighborhood, Walden Woods. Within walking distance of Shabbos minyanim, prices in this up and coming location were relatively low, and a few dozen “pioneering” frum families bought homes there. By 2019, prices in Walden Woods had risen by approximately $100,000 per home, and brokers were selling houses ten minutes further out for those who wanted the new discounted area!

Home Buyer Tip #2 Look Past The Exterior

There’s an old saying that “The best real estate bargain is the ugly home on a pretty block.”  Freshly manicured houses typically cost more money, and by selecting an unsightly home with a durable and functional interior, you may get a great deal.  Aesthetics like siding, landscaping, painting, and flooring can usually be replaced relatively inexpensively, and as a bonus, fixer-uppers allow the new owners to finish things to their tastes.

One buyer found a home whose only negative was its atrocious siding.  This shortcoming lowered the asked prices of the house by $30,000 but required a fix which cost far less than that!  Keep in mind, however, that a home that needs TLC may be a turn into a disaster if it sustained serious damage or neglect.  Hiring a knowledgeable home inspector is always a good idea, but it’s especially crucial for those considering a property that needs work.

Home Buyer Tip #3 Make A Strong Offer

Sellers WANT to get a good price, but they NEED a buyer who will actually close the deal!  Owners like to see offers with the fewest possible mortgage and inspection contingencies (i.e., rights to back out) and may accept a lower bid from a buyer who commits to move more quickly.  Some investors take this tip to the ultimate: offering to buy a house in cash virtually on the spot, but most buyers are not ready to go that route. What may help instead is getting a pre-approval letter from a mortgage lender which confirms that the buyer has a mortgage lined up.

This path helped a another eager home-buyer who wanted to live in a desirable area, but kept losing bidding wars.  The client then received a loan commitment in writing which enabled him to bid on the next house without a loan contingency.   After winning the contract, the seller’s agent confirmed that even though the price wasn’t the highest, the deal was clinched based on the strength of the non-contingent offer.

It’s Not For Everybody

Especially by working with a knowledgeable and patient agent, you may be able to get a home that meets both their space and financial needs. However, chasing a discount for such an important life step is not always the way to go and for some families, the tradeoffs required for bargain-hunting are not always worth it. Perhaps frum neighbors to socialize with is really important to a spouse and children, and getting involved in home repairs is a headache some are unprepared to deal with. You may choose to wait a bit and save up for the more substantial down payment which would enable you to purchase the house which checks all your boxes. And during this time, maybe you’ll even get lucky, and mortgage rates will fall!

Just Because You Could Borrow Doesn’t Mean You Should

Mortgage lenders have rules of thumb about the maximum levels of debt a home buyer can carry and still be approved. These companies rely on historical data which show that usually someone who uses less than say 35% of their income on debt payments won’t default.

There are serious problems with relying on these lender guidelines for deciding how large a mortgage you afford. Firstly, lenders only care about your ability to pay them the monthly payments, not whether you’ll have enough money left over to pay for your other needs. Also, standard financial rules of thumb don’t work for large frum families who have massive financial obligations for tuitions, simchas, and kosher food.  An overly large house payment can make you fall behind on your other bills and or even lead to delinquency, foreclosure and collateral damage to shalom bayis. It’s worth stretching to buy a home but not too far.


Want to dig deeper?

Try these related articles

Home Buying: Is Waiting for a Better Price Smart?

Hidden Housing Costs

Getting the Best Mortgage Rate Possible

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