With many real estate markets rebounding or thriving, foreclosure rates way down, and short sales all but gone in most areas, can you still find a bargain when buying a home? Yes, but you'll have to be sneaky, creative, diligent, or all of the above.
You've got a couple hundred K lying around, right? It may sound ludicrous to some, but buying a house all cash is a growing trend, and one that can save you money upfront and down the line. Sellers may be more willing to negotiate on the home price for a cash purchase. A shorter home search and escrow period can save you money on carrying costs in your current home. And, obviously, not paying a mortgage can save you hundreds of thousands of dollars in interest.
Go to an auction
While foreclosures are down across the country, some homes still end up going through the process and then ending up available at auction. That means you can bid in person (or online if that option is available) in an attempt to get a bargain home. Take note that you'll probably be in competition with investors and home flippers, and many auctions require an all-cash payment, which makes them difficult to purchase for the average person. You'll also want to keep in mind that many auction homes are in poor condition - be sure to check them out before bidding so you don't end up with a money pit.
Buy in a developing neighborhood
If you're willing to compromise on location, you might be able to find a great deal. And, you might even get help with the purchase.
"Some towns offer transitional and developing neighborhood homes at very steep discounts," said Fortune Builders. "You may have to agree to live in the house for a certain number of years or agree to do a good amount of repairs, however this is definitely a program to search for in the area you're looking to buy.
Buy a fixer upper
Have a way with a hammer and a desire to make your place your own? Buy a project house. You'll save a ton of money and you'll be able to redo it in your style instead of living with someone else's. Some loans might even help pay for your renovation as part of the home purchase.
Rent to own
Is your less-than-excellent credit and/or unsubstantial down payment making it difficult to get a good loan? Maybe you're having trouble competing with other buyers in a competitive market. Both of these scenarios could end up with you paying more than you want to. But you may be able to get a great deal and ease into the market with a rent-to-own or lease option arrangement.
"Whether the issue is a lack of down payment, a little too much debt, or a lingering ding on their credit report, sometimes buyers just have to wait while they work on their credit profile or save more money before they can buy a home," said Realtor.com. "In such a case, a rent-to-own or lease-to-own arrangement can sometimes be a solution."
The advantages of renting to own are the ability to lock in a purchase price from the beginning of the agreement, and saving toward a down payment - “During that time, the renters usually pay an above-market rent, with the excess rent credited toward a down payment when the contract ends,” said Realtor.com - and work on improving their credit so at the end of the term, they are able to qualify for a great rate.
Buy in the ‘burbs
People don't move to the suburbs because they want to be an hour and a half (each way) from work. It's a tradeoff for affordability, plus a crack at a family-friendly atmosphere and quality public schools.
For $500,000 ($499,990, to be exact), you could buy this brand-new home in the family friendly suburb of Santa Clarita. You'll have to deal with a long commute to…well, pretty much anywhere, but, in return, you'll have great space and a home designed just for you with all the features and finishes you want that no one has ever lived in. For the same money, you can buy this tiny condo a few blocks from the beach in Santa Monica. It's only 855 square feet and one bedroom, but think of all that time you'll save not being in the car!
That's the thing about location. It's give and take. While you might be able to find something in the location you really want for the money you have, it may not be what you want.