Four Ways to Find Bargains in Real Estate

There is no question that great deals are being found in the housing market right now, but if you stop to think about it, housing may be the most affordable it has ever been. Housing prices have fallen by more than 40% in many parts of the US, mortgage rates have risen but are still near historic lows, and personal income levels for those who have kept their jobs through the recession have remained relatively stable. A buyer could get a lot more house today than he or she could have just two years ago with the same amount of money, and buyer s are beginning to emerge.

In the three years leading up to the bursting of the housing bubble, more than 2.5 million new homes were being built annually. The increase in housing demand, a function of population growth, runs at a rate of about 1.5 million houses every year. Part of the reason houses are so much more affordable now is simply that there was a lot of inventory sitting empty that needed to be filled. Houses today are being built at an annualized rate of less than half a million, so it is only a matter of time before demand leads to higher prices.

With houses more affordable than ever, how can you make sure you get a good deal?

- Be patient: It’s a buyer’s market and the buyer is calling the shots in most transactions. There are still plenty of bank owned properties and desperate sellers who just want to get out from under a house. Take your time to find the house that’s a good fit for you and search the listings of houses on the market thoroughly.

 - Find Desperate Sellers: If a house has been on the market for three months or more and has seen multiple price reductions, chances are that you have a desperate seller on your hands. If that seller didn’t need a deal fast, they wouldn’t be dropping the listing price so aggressively. A price reduction should be taken as a signal that the seller is willing to go even lower to make a sale. Throw an offer out there that places you in a strong negotiating position and you might be surprised to find sellers giving a lot more than an inch in order to get a deal done.

 - Find Houses Being Flipped: Real estate speculators made huge sums of money during the first several years of this decade flipping houses—buying a house that needs some work, throwing in new carpets and a fresh coat of paint, and listing the house again almost immediately trying to profit on the spread between their purchase price and their asking price. The housing market has flipped on flippers and many are sitting on multiple properties and struggling to make multiple mortgage payments. Home sales are public records and several websites available to anyone online will tell you when a house on the market was last sold.

 - Work with an Agent: A buyer’s agent in your area will know where to find bargains, which houses have been on the market the longest, and other helpful tips for potential buyers. Using an agent on the buy-side of a real estate transaction doesn’t cost you a penny—their commission comes from the seller. Also, because they’re eager to complete a sale, they can negotiate aggressively in your behalf. There’s nothing to lose and a lot to gain if you use an agent as a buyer.