Seeing the asking price of a property can be enough to deter you from buying it. Similarly, it can be more than enough to raise your eyebrow and draw you in for a closer look. In some cases, people have missed out on an excellent home because they were too put off by the extortionate asking price.
Similarly, many people rush into buying a house because they see the price tag and think they’re getting an absolute bargain.
In either case, you really shouldn’t put too much attention on the initial asking price. After all, this is simply a price tag that the seller wants to attach to their house. It’s based on some estimations – usually via real estate agents – and the whole aim is to sell the property as quickly as possible and for as much money as they can. But, this price should be taken with a pinch of salt, and here’s why…
Initial Prices Can Be Lowered Significantly
Some people put a big price tag on their house in the hope that someone out there will pay it. However, they don’t genuinely believe their home is worth that much – it’s more of a hopeful shot at nothing. In many cases, once you look around the home and show your interest, you can negotiate a lower asking price. All of a sudden, a property that was out of your budget is now within it. So, you never know, you could end up buying the home of your dreams. If you’d ignored it because of the price, you’d have missed out!
Extra Fees Should Be Taken Into Account
On the other hand, you should be cautious of property prices that are extremely low. Why are they so low? What’s causing the house to be this cheap? Well, there could be all sorts of secret issues with it, as well as a host of hidden costs. Most people don’t know how many extra fees are tacked onto the price of a property. So, a cheap home can quickly go over budget if you have to pay for lots of extra things. Of course, you have all the general admin tasks to pay for, but the biggest hidden cost is any maintenance needed on the house. You move in, then suddenly realize half the property needs to be renovated.
As a consequence, you’re spending more money than you’d like, and it increases the overall cost of the property. You may have technically paid, say, $400,000 for the house, but you ended up spending another $50,000 on repairs and maintenance. If $400,000 was your initial budget, you’ve now gone $50k over it!
You’ll need to factor quite a few things in this, with potential repairs and maintenance being notable. You should check to see if any mold mitigation services, foundational repairs, and similar issues are needed before you buy. You could be out a lot of money because of it.
The moral of the story is that you should always be cautious when seeing a property’s value. A good idea is to have some parameters in mind for the type of home you want to buy. Then, rule out any that are absurdly over your budget. Let’s say your budget was up to $400,000 – there’s no point looking at homes that are $500,000 or over as you can’t knock the price down by $100k! From here, you should shortlist any homes that pique your interest, and book some viewings. After viewing a home and looking around it, you get a better idea of its true value. Now, you can factor in any hidden fees and see if it’s still worth buying or not.