How to Locate and Negotiate a Home Purchase
in Blowing Rock, Boone, Valle Crucis, Banner Elk, Seven Devils, or Deep Gap
Dreaming of owning a house in the North Carolina Blue Ridge Mountains in Blowing Rock, Boone, Valle Crucis, Banner Elk, Seven Devils, Deep Gap or Ashe County. The idea that you can live in a mountain house that will some day be yours without a mortgage is enticing. Locating the right house in the High Country and negotiating the best purchase price is a test of your resolve.
The first step in the dream of mountain home ownership is to separate the idea of house from the idea of home. Starting to think of a house as a home prematurely can create two immediate problems. If you are looking only for a home, you will reject many houses that may be excellent purchase choices because you simply do not want to live in these houses or neighborhoods. There are a lot of high country houses that can be bought and sold on your way to one that you actually want to call your home.
The second problem with beginning to think of a house as your home to soon is that you may develop an attachment to the house that will cripple your ability to negotiate. The "I need this house" mentality can set in, and you will overpay for a mountain house that you could have gotten for thousands less. Try to avoid becoming too attached to a piece of property until after you have walked away from a successful closing.
If you have time to look and negotiate without the pressure of needing immediate housing, it will help you find the best mountain house for the best price. Whenever possible, try to position yourself so that you can stay where you live for several months during the search and purchase process. This will give you the ability to say no to a bad deal without feeling like you are in a panic situation. Even when moving to a new community, it can be a good idea to find a place to rent for six months to one year while you look for your next house.
To begin your search, you must determine if you want a house that is ready for you to immediately occupy. If you can live with a house needing some repair and renovation, many dollars can be saved. For a "move in ready" mountain house, look for one that has been recently renovated in a neighborhood that is not fully restored. This should give you a house that is on the upswing in value while still being a good price because of the lesser houses around it.
Unlike purchasing a new home where the price is set by the builder and is hard to negotiate, a pre-existing home price is based on multiple criteria. The quality of construction, the overall condition of the house, the quality and desirability of the neighborhood, and how the house looks from the street are just a few of the variables.
Before starting to tour houses, preview neighborhoods. When it comes time to live in the house or to flip it, the neighborhood will attract or repel potential buyers long before they step over the threshold. Since very few people today move into a house and stay for multiple decades, a future sale of the house is inevitable. Think about what it will take to sell your mountain house during the buying process. Even if a house is rehabbed, if the neighborhood is bad, it will not sell for a price to let you recoup your costs.
Once you have selected the area that will work for you, begin to look at houses in these areas that are below your desired purchase price. If you look at houses needing repairs, determine if you can do the repair or will have to pay for it to be done. This will greatly alter how much it will cost you to do the restorations. Sweat equity is still equity. Paid labor can erode potential equity in a hurry. It is alright to pay for labor, just make sure that you factor this into the purchase price before making an offer.
Once you have located a moutnain house, it is time to begin the negotiating process. Look at the asking price of the house. Have your agent secure the prices of similar homes in the area that have recently sold. Try not to look at the selling price of any home that sold more than a year previously. These prices will give you an idea about how the house price compares to what others are willing to spend in this neighborhood.
Deduct the cost of expected repairs from the price of the house if it does not appear to already be reduced to compensate for problems that are already noted in the selling brochure. Even if reductions have been made, you will need to make certain that this reduction is enough. A contractor that is recruited by you to inspect the house and estimate the cost of repairs is the best way to verify your opinions.
If you have selected the right house, the owner is looking to sell sooner than later. It is in your best interest to test how firm the owner is on the price. A higher offer will encourage the agent or agents to convince the owner that you will pay more for the property if he or she will stand strong on the price. Coming in low sends the message that you have seen the warts and expect concessions on price to offset them. Remember, in negotiating, it is much easier to go up as a buyer than to go down unless you uncover new information.
Offering 20% less than the asking price is not out of line, but a 10% lower final price is more in line with reality most of the time. The selling price is usually set by the best guess of the listing agent. Unless you are buying pristine property, there is a lot of room to adjust the price. Most homes are not being sold with a thin line of profit. The owner is often already committed to another property and needs to sell. If the property is repossessed, the bank is required to sell it. Banks are not allowed to hold property indefinitely.
You need to expect to go back and forth at least two or three times before finishing negotiations. If you want the property cheap, do not move up quickly on counter offers. For example, you may offer $287,500 for an asking price of $325,000. The first counter might be $317,500. If you want to get the property around $300,000, then counter at $295, 200. This says that you expect the owner to make more serious cuts in the price. If the second counter is at $305,000 or less, you will probably get close to your desired price. Keep the next offer down. Move up by $2,000 or so each time. If you reach a stalemate, you might try to get some of the closing costs covered or some repairs made by the owner prior to closing. By not becoming too attached to this house prematurely, you can walk away if the gap between you and owner stays to wide.
A final negotiating tactic is to put your final offer on the table. Tell the owner it is your final offer. Make it good for several days. Stop negotiating and wait it out. If no new offers come in a month, most owners will cave in on price. Keep looking during this period. If you find another property, give the owner a final shot and withdraw the offer so you can begin negotiating on the new property.
Try to be realistic in negotiating. If you can make money on a house at a price, do not work too hard to drive the price down to an unreasonable level. You will never make a deal without some give and take. Protect yourself, but try not to miss a great house or opportunity to make a profit for a relatively small difference in price.
If you have questions about this article or about real estate in either in Blowing Rock, Boone, Valle Crucis, Banner Elk, Seven Devils, Deep Gap or Ashe County, please give one of our professional Realtors a call today. Ace Realty in Blowing Rock can help you with all your Blowing Rock area real estate needs. We can be reached at (828) 295-6165.