Most people have no idea what they’re in for when buying a new home. Sure, you can research how to prepare and learn from the experiences of others, but every homebuyer is unique, with a situation unlike that of everybody else. The underwriting process may require efforts you didn’t consider when imagining your first home. There are a million other ways problems can crop up, as well.
All of this can get very expensive, and that’s before you’re even under contract. To keep costs down, it’s important to make the right decisions before you put in an offer for a new home. Following your intention to proceed, you’ll want to keep your head through the flurry of paperwork and phone calls. If you succeed, you’ll have saved potentially thousands of dollars or more. Here are some ways to do just that.
- Split Costs With the Buyer. Some agents, real estate lawyers, and title companies will recommend this, but some overlook this important step. Closings typically cost over $10,000, but many of these costs can be split with the seller. Attorney and transfer fees are obvious candidates, but in states where buyers and sellers don’t split fees automatically (or sellers don’t cover them completely), it’s important to request that you and the seller go Dutch for inspections and other costs baked into the transfer of valuable property.
- Shop Around. It’s important to shop around at every state of the home buying experience. Whether it’s going to 5X more showings than you would normally care for, time to compare home insurance, or time to find discounts through local title companies - these actions are time well spent.
- Use a Real Estate Lawyer. Most first time homebuyers think that they must use a real estate agent to broker the complex transaction. While agents can be very helpful, they are by no means mandatory. With a little extra work, you can set up showings or find sellers who are also not using agents. When the time comes to actually buy the property, you will find that paying for a real estate lawyer’s time is much less expensive than covering the agent fee of 3-6% of the home’s value. That’s an incredible savings.
- Invest in a Good Inspection. There is nothing more sickening than to buy a home, only to discover a major problem that will cost an arm and a leg to fix. Problems like these will be easily found by an experienced inspection, but for some reason people still forego this cost of several hundred dollars. If an inspector finds a major problem, you will be able to get out of your contract. To gamble your future financial security (in the case that you do discover a major household flaw after purchase) just to save a few hundred dollars is a foolish gamble indeed.
There are many other ways to save during the homebuying process. Whenever a cost emerges, take the time to consider ways to save. Do research, ask your friends, whatever you do, don’t just pay things blindly. You can save thousands this way.