How to Avoid Overpaying on a Property

When you’re getting your finances together to buy a home, it can all be a bit confusing. Deciding how much you can afford to spend takes a lot of work, and then you have the delicate business of deciding how much to offer on a property that you like. You might have set a top budget, but that doesn’t mean you want to stretch your budget all the way. Paying too much might not matter too much if you’re looking for your forever home, but it could be a mistake if you’re planning to sell up in a few years. If you want to avoid overpaying, there are things you can do to make sure you offer the right price.

Set a Clear Budget

Before you do anything else, it’s essential to know what your budget is and how much you can really stretch it. It’s a good idea to think about how much you would ideally want to spend as well as your absolute maximum budget, which might be two different figures. When considering your most comfortable, ideal budget, think about your monthly mortgage payments, how much you’re able to borrow, and your loan-to-value amount. Your maximum budget might be more than this, perhaps leaving you with less savings or raising the cost of your monthly payments, but it shouldn’t be so high that it pushes your finances to the brink.

When you're getting your finances together to buy a home, it can all be a bit confusing. Deciding how much you can afford to spend takes a lot of work, and then you have the delicate business of deciding how much to offer on a property that you like. You might have set a top budget, but that doesn't mean you want to stretch your budget all the way. Paying too much might not matter too much if you're looking for your forever home, but it could be a mistake if you're planning to sell up in a few years. If you want to avoid overpaying, there are things you can do to make sure you offer the right price.

Image from Pixabay – CC0 Licence

Do Plenty of Research

Researching the market is a must if you want to work out how much you should be offering on a property. The first thing that you should do when you’re looking at a property is to look at recent prices for similar properties in the area. You can start with the same street that the property is on, which should give you the most accurate picture. However, this is assuming you’re able to find recent sales of properties that are of similar size and condition. If not, you may need to expand your search to a wider area. Look a little further out at similar streets and properties.

Considering information from the Land Registry is usually at least six months old, it’s not always the best way to find out the most up-to-date prices. If prices are rising or falling quickly, you might also need to find your information elsewhere. Paying attention to the news, speaking to estate agents, and talking to other buyers will also help you to understand current prices. It will give you more information on things such as whether people are typically offering above asking prices and by how much.

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Know What a Property Is Worth to You

While the market price of a property is important, you also need to consider how much a property is worth to you. Someone else might be willing to pay a lot more for it, but that doesn’t mean you have to match what they’re willing to pay. When you’re considering any property, it’s still important to decide how much it’s worth to you. You can research how much it’s likely to sell for, but that might not mean much if it’s over your budget or how much you’re personally willing to spend on that particular property. Keep in mind how long you want to keep the property. Is it your forever home or just a starter home?

When you're getting your finances together to buy a home, it can all be a bit confusing. Deciding how much you can afford to spend takes a lot of work, and then you have the delicate business of deciding how much to offer on a property that you like. You might have set a top budget, but that doesn't mean you want to stretch your budget all the way. Paying too much might not matter too much if you're looking for your forever home, but it could be a mistake if you're planning to sell up in a few years. If you want to avoid overpaying, there are things you can do to make sure you offer the right price.

Be Sure to Get a Survey

Getting a survey for a property that you’ve made an offer on is a must. While it’s not technically required, it’s not a good idea to skip it. Your lender will carry out a valuation survey, but you should make sure to have your own survey carried out. If you get a RICS survey, there are three levels providing different levels of detail. If you get an RPSA survey, there are two levels to choose from. Once you have your survey results, you can negotiate a price if it looks like a lot of work will be required. You might be able to make a case for lowering your offer if the survey shows that a significant amount of work needs to be done. This will allow you to save some money on the property so that you can afford to make any necessary repairs and changes.

Pay Attention to the Lender’s Valuation

The lender’s valuation of the property can also give you some room for negotiation. If the lender values that property lower than your offer, it can pose a problem. They will only lend you enough to match their value, which might mean you have to find the rest of the money elsewhere and you might have to change your loan-to-value figure too. However, if the sellers don’t want to lose the sale, they might be willing to accept a lower figure, especially if other lenders are likely to undervalue the property too.

Keep Up with Current Trends

Make sure that you keep up with current trends in prices, as well as what and where is popular. Which areas are particularly in demand right now? What sort of properties and what features do people want? Maybe flats are less popular than houses or a lot of people are looking for places with gardens. This can help you to know what you’re going to pay more for and what might offer you more of a bargain.

Calculate Renovation Costs

Having a good idea of renovation costs will help you to offer the right price on a property. The survey will let you know about any repairs that might need to be made, but you also need to think about what changes you want to make to turn it into the right home for you. Maybe the kitchen is perfectly functional but it’s not to your taste. Renovating and decorating costs need to be included in your budgeting, especially if you’re planning on making changes soon after moving into your new home.

Don’t pay more than necessary when you’re buying a home. Do your research and set some boundaries for yourself to follow.

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Dr Marina Nani

Founder

Dr Nani is the Founder of Sovereign Magazine. She is also Editor-in-Chief of Sovereign's sister publication, Rich Woman Magazine. Passionately advocating for Social Edification, Dr Marina Nani is coining a new industry, MAKE THE NEWS ( MTN) with the aim to diagnose and close the achievement gap globally. Founder of RICH WOMAN SOCIETY™ Marina believes that there is a genius ( Stardust) in each individual, regardless past and present circumstances; "not recognising the talent in each individual, leaves our society at loss. Sharing the good news makes a significant difference on your perception about yourself, your industry and your community."

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