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Three Easy-to-Follow Tips to Avoid Overpaying

Posted January 23, 2010 by Matthew Denton

Try these suggestions to help you save a lot.

My neighbor is contemplating on contacting her realtor and asking if she did overpay for the house that she bought two years ago. She felt she was not well informed of the other options that she had. This story isn’t a new one at all. In fact, how many home buyers have felt this kind of buyer’s remorse anyway?

The consequence of overpaying is a difficult problem to solve. For example, if a buyer realizes he gets a good deal by paying $250,000 for a 2BR unit when in fact, the seller has overpriced it by $50,000, it can speak trouble – real trouble. By the time that the owner decides to sell the property, he’ll realize that he owes more than what the property is worth. The worse part is when the bank sends a foreclosure notice when the owner fails to pay his mortgage payments.

Though solutions are hard, it’s still possible to prevent overpaying. Here are three important tips for you to follow.

Tip No. 1: Ask for a comparable market analysis from your realtor.

The comparable market analysis is a list of comparable homes that have sold within the last six months and are closely similar to the one that you’re interested in purchasing. These homes must also be within the immediate vicinity with each other. Through the CMA, you can better gauge the right price that you’re supposed to pay for.

Tip No. 2: Hire a separate realtor to make a Brokers Price Opinion.

The Brokers Price Opinion (BPO) is a broker’s best estimation of the value of a property. It is cheaper than an appraisal and you can find further proof if you’re being charged way to high. If your existing broker provides his lender with a BPO, make sure to find another broker who will do the same job. In this way, you’ll have a separate estimation.

Tip No. 3: Visit the Comps That You Haven’t Seen Yet

Even if it would cost you a few litters of gas to follow this advice, then you better do so. Ask a friend to go house hunting with you; you’ll need that second opinion along the way. More so, the dream house that you have in mind may just be priced a lot lower than the one that is being offered.

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