In this video we'll look at how to get the best deal when buying a house and
all the factors related to it. Such as financing savings, choosing a real estate
agent and more. That's starting right now.
Welcome to Homebuyer's School
brought to you by Brookfield Residential.
– Hi everyone I'm Karl. Welcome to another
Homebuyer's School video, a channel where you get the latest strategies tactics
and tips from home buying experts, and remember if this is your first time on
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the subscription button below, hit the little notification about so you don't
miss anything. So today I'm joined by Kevin French, realtor with Re/max Realty
and the question we're gonna answer today is, how do I get the best deal when
buying a house? So Kevin, how do I get that?
– So there's a handful of avenues. First, financially you're going to
typically have a mortgage on the property. When you have a mortgage,
you're going to want to shop for the best rate. I would encourage
people to work with a mortgage broker. You can work with a mortgage specialist
at the bank specifically, however often they don't voluntarily give you the best
rate. So having a mortgage broker, they can work with numerous different lenders
and then shop those lenders together. It's more competitive, and then you're
more likely to get a better rate to save on that—nd then understanding the
market that you're purchasing within. So if you're buying a brand-new property,
understanding the new competition in the area—obviously you should just be
comparing primarily to that—and then if you're purchasing retail, again
understanding the competition in the area so that you're not overpaying. From
there you're going to want to negotiate the best deal possible. So that's
understanding what the the negatives are about the property. Whether it's location,
the condition, a combination of that and a handful of other things—and then
you're going to comprise a list. Understand the—as much as you can—
understand the position as to why the home is being sold and then
use that to your advantage—and then negotiate down on the price from there.
– So let's go right back to I guess, choosing your mortgage broker or
choosing your Realtor. I'm sure that could have a significant impact in terms
of getting the best deal when buying a house right? Obviously choosing the right
realtor and obviously choosing the right mortgage professional.
– There's a handful of different tactics that different
realtors use when purchasing a property, and their negotiation. How experienced
somebody is will typically work well with their negotiation skills.
If somebody doesn't sell a lot of real estate or they do it part time, they
usually don't have a stronger understanding of how to go about it—and
then understand the market that the buyers purchasing with them—
understanding the community and then working with that. If it has negatives
for the property that aren't seen as negative for the buyer then the agent
can work with those facts and then negotiate a better price.
– I know you mentioned comparing mortgage rates —
and if you want to know more about
comparing mortgage rates where we actually talk to a mortgage professional,
check out our video above and description below — so let's talk about
savings. How does your savings impact the best deal when you're
buying house? I guess like, would you get a better deal if you save just 5% down
or 20% down—does that impact?
– So if you put 5% down, you're going to—
anything less than 20% and you're gonna pay insurance premiums. The insurance
premiums are going 5% increments, so 5% down obviously the minimum.
You have to pay an insurance premium, I believe it's just around 4%.
So essentially you're putting down 1% if you put down 10%, then that drops to I
believe 3.15%—and if you put down 15% it's 2.85%—and then if you
put down 20% then that insurance premium just disappears.
So obviously significant savings depends on the price of the
property but not paying that premium is a pretty big advantage.
– And let's look at the difference between
buying a new home build and resale home. So for a resale home
I think you have to actually think about like, is it a fixer-upper—or is it
like, you can actually just ready to move into and you can live for the next 5,
10 years right?
– Yeah. Factor that in there is the opportunity as well to do a purchase
plus improvements mortgage. So if you did want to buy a property that needs
some light improvements that would increase the value, you could look at
that. The lender would give you financing for that. So they'd do financing for their
permits typically up to forty to sixty thousand dollars is where it's
capped at. You can't renovate the entire property with that budget
usually but it gives you the opportunity to maybe redo the kitchen or redo
the roof and the windows if those are important things that need to be done.
– Okay, and let's look at new home build. How about the upgrades—how do you
factor that into getting the best deal for the home?
– Builders often of course, if they charge you know, five thousand dollars for
granite, they don't pay five thousand dollars for that granite. They got
you know, bigger contracts and they get better rates, so that might be a way to
get some things included in the home that are luxuries or add-ons
that the buyer wants, but then the Builder can give it to them because it's
less of a cost. Although it's perceived as $20,000 in value for example, to the
buyer, the reality is that the cost might be a lot less than that. So the Builder
might be more willing to negotiate on something like that rather than directly
off the price of the property.
– And remember, if you want to know more about
choosing the best home upgrades for resale, check out our video above and the
description below. How about off-peak or times in the year, does that impact
being able to get the best deal? Like is it better to maybe buy in the winter
when less people are buying? Or I know like sometimes maybe the spring or the
fall is a great time to buy, but when no one's buying maybe in the summer.
– The the best time to sell is going to be the spring and the fall. Best time to buy,
there's also more opportunities in the spring and the fall. So there's more
options to choose from, so that has its advantages. Of course in the winter when
there's less activity, the property still in the market for a longer period of
time, you might be able to take advantage of something there if the seller is
motivated or highly motivated to sell. But a negative side to that too is you
can't properly inspect the property if it's covered in snow. You can't see the
backyard, there's a lot of things that you don't get to fully understand about
the property when you're purchasing it. So there's downsides to it, but if you
catch the right buyer at the—or sorry— right seller at the right time,
there might be a better opportunity.
– And how about basements? I've heard a lot
about like, should a home come with a basement—does it increase value—does
that impact on how to get the best deal for the home?
– Basements are one of those things that
are often done for the homeowner. So if you're going to develop your basement,
it's for your benefit. Don't expect to make money on it. If you
hire a contractor of course those ranges can vary in the cost. Typically you're
going to break even or lose some money if you're very thrifty, and you have
friends and family that can help where you can do some of the work yourself.
I would encourage you to always permit it of course and then when the work is done
you could make a bit, but usually on the whole you're doing the the basement for
yourself, or if it cost you twenty thousand you're going to see a twenty
thousand dollar gain in the property. It does make the property more attractive
on the market. Though if someone—if it has a bedroom and a bathroom that's key,
but if it has a bedroom and a bathroom, and the neighboring property is maybe—
can be fifteen thousand under them, and you have that and they don't, it's going to
give you an edge.
– Got it. And then finally, is there a way to negotiate—
I know there's lots of ways to negotiate for the price of the home—but is there a
way to negotiate maybe closing costs?
– Not as common, but I guess you could. Anything is negotiable of course
in the sale of the property. An interesting negotiation
tactic for example that we're seeing more of right now, it depends on th
the agent and their experience with it, but it's asking the listing agent or the
seller essentially to send a reverse offer. So instead of you submitting an
offer asking to buy the property there at five hundred, you offer four seventy
and then you negotiate down from there. You say, well if you're telling me that
you're motivated, send me a reverse offer—send me an offer
that's under your list price and we'll negotiate up for my number instead of
down from their number. Gives the buyer a little more control.
– Great. Do you have any more tips in terms of getting the best deal when
buying a house?
– Stick with facts not emotion, and offer a realistic price to initially
set the bar. Obviously that price you could—you're going to be expected to
increase from it as they're going to be expected to decrease from theirs, but
don't go in with an insulting offer. Whether we want to or not, it brings in
emotion from the seller side that typically starts off on negative footing.
If you bring in a realistic offer that's with sound facts and stick with your
your reasoning—your logic behind it —keep drilling that into them and then
actually, the sellers will understand where you're coming from and
understand why they should accept that offer.
– Great. So the question of the day I have for you is,
did you get the best deal or did you think you got the best deal on your last home
purchase—and if so, how?
Let us know in the comment section below.
And if you want to know more about
negotiating the price of your home,
check out this video as well as our other
home buying videos here—and don't
forget to hit the subscribe button to make
sure you get information straight from
home buying experts. Thank you for
watching and we'll catch you
in our next video.