Tips for Buying in a High-Priced Market

Investing in a home now is still a good opportunity for many people. Understanding market conditions and how to overcome the challenges within it can empower you to make better decisions about your purchase.

Home prices are a big concern for many homebuyers today. How can you still find a home that fits your budget and is worth your investment?

Recognize the Trends in Home Prices

The National Association of Realtors shares that the median sales price for a single-family home nationally is $378,700. That’s about a 4% increase from the same time in 2022. Nearly 90% of all metro areas saw prices grow. While home prices are on the way up throughout the country, homebuyers can take steps to find properties that fit their needs better.

5 Tips for Finding Lower Home Prices

Consider these five tips to help you find the most affordable homes that fit your needs. Thinking outside the box could help you find a dream home that’s also quite affordable.

#1: Look Into Less Expensive Neighborhoods

A home in a less expensive area might add 10 minutes to your commute or have slightly older homes, but you could save a lot of money by focusing on those neighborhoods. You could get the same — or more — square footage for a fraction of the cost.

To find these areas, work with a real estate agent to compare the market value in each community. You can also do some research online to compare home size, type, age, and features from one area to the next.

#2: Consider Alternative Financing Options

High home prices are a problem, but securing a lower interest rate on your home loan could make properties more affordable. The key to doing that is to find alternative financing options you may qualify for right now.

FHA loans are often one of the best options. You could qualify if you are a first-time homebuyer or haven’t owned a home in the last three years. This typically reduces your down payment, interest rate, and closing costs. Also, consider first-time homebuyer grants, VA loans, and USDA loans if you plan to buy in a more rural area.

#3: Negotiate a Lower Sale Price

Though harder to do than many realize, getting a lower sale price may be an option if you know how to negotiate. Start by knowing what the home is truly worth. A property’s value is based on the list price and factors like current market conditions, the home’s age and condition, and how the property compares to others locally.

Find unique ways to negotiate a better price. If the home has been on the market for some time, a lower price may help the seller move on. You may be able to reduce the sale price of the home if there’s notable work or repairs that are necessary. A home inspection could reveal potential significant repairs to the home’s heating and cooling, roof, or foundation, which could help to lower the price. If you can close on the home fast, that might incentivize the seller to lower the price.

#4: Act Quicky if It’s the Home You Want

Home prices are high, but the rate of selling homes has also cooled. You may not have as much competition in some areas to make a move on a home you want, but that doesn’t mean you have a lot of flexibility. In other words, you should be ready to buy a home the home you want when it comes onto the market at the right price.

To do that, ensure you are approved for a home loan. That’s going one step beyond getting qualified. Buyers need to show sellers they are serious and ready to go. If a good deal comes on the market, there’s no time to wait for your lender to approve you for a higher loan amount. If it’s been some time, get back in touch with your lender to ensure you won’t encounter problems when trying to move a loan through quickly.

#5: Use Down Payment Assistance Programs

Many homebuyers qualify for down payment assistance programs from the government. If you don’t have a large enough down payment to match the current high prices, these programs could help you.

For example, some states offer grants you do not have to repay. Forgivable loans are another opportunity. These tend to be a second mortgage on a home for the down payment amount. They will have 0% interest, and as long as you remain in the home for a set number of years, the loan is forgiven. Deferred payment loans, also with 0% interest, may also be available. These loans are not forgiven, but they let you borrow money for a down payment.

Also, turn to matched savings programs from a government agency, community organization, or bank. Some states offer very specific grant programs for those with demonstrated need.