3 Tips on How to Hunt Down Real Estate Bargains

For Millenials, Gen z-ers, and beyond, the prospect of purchasing their first property is far scarier and seemingly unattainable than in previous generations. In the past, real estate was still a major purchase, but a typical household in which the father had a full-time job and the mother stayed at home had sufficient income to buy a home and raise a family.

In today’s reality, even with a dual income, couples are scraping by if able to buy a home at all. As a result, many of today’s young families are relegated to renting or squeezing into a condominium. The prospect of finding a real estate deal within their budget isn’t seriously entertained.

Unlike other industries, most people think there’s no such thing as a serious deal in real estate. But for those with good credit and solid employment that are just shy of affording a home, there is still hope!

Be diligent, follow these tips and if you’re patient, you will be able to finally make your dreams of homeownership come true.

1. For Sale By Owner

When homes are for sale by owner, you can get really lucky and find a listing that’s below market value because the seller accounts for savings on agents fees. Additionally, they are generally much more willing to negotiate, enabling you to explore terms with them to meet your budget. The trick is finding these real estate listings. The best way to be the first one with your foot in the door is by going to the big real estate websites, like Trulia and Zillow, and setting alerts for whenever a ‘for sale by owner’ property comes on the market in a desirable area.

Modern Suburban Home for Sale Real Estate Sign in front of modern home.

2. Rehab Loan

A lot of young buyers could swing purchasing a home, but often what they can afford is undesirable. Understandably, they’d often prefer biding their time in a non-committal rental unit than buying an old run-down home they can’t afford to front the cash to renovate. Luckily there’s a type of loan you can apply for that allows you to incorporate renovation costs. This gives you the opportunity to hunt down great real estate bargains without having to worry about the quality of your home in the short term.

Material for repairs in an apartment is under construction, remodeling, rebuilding, and renovation. Making walls from gypsum plasterboard or drywall.

3. Foreclosures

Banks focus on money management, not property management. For this reason, in the unfortunate scenarios when peoples homes get foreclosed on, banks are willing to give significant discounts just to unload the property. However, with foreclosures, they’re a mixed bag, there are a lot of run-down properties with issues the previous owners probably couldn’t afford to fix. Work with an experienced agent and make sure you have a thorough inspection conducted so you know exactly where you stand. As mentioned in number 2, rehab loans are a great way to make a foreclosed property a viable option.

Leaning foreclosure sign in front of a modern single-family home on a cloudy cold day

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How Much Homeowners Insurance Coverage Do You Need?

Imagine saving for a home downpayment for years, then working to pay off a mortgage, only to have the home burned down in a fire. How would you be able to get your life back to normal? 

The most common type of homeowners insurance (HO-3) protects you in case your home or belongings are damaged, stolen, or destroyed by fire, hurricane, hail, lightning, and all other disasters that are not specifically excluded in the policy.

Most mortgage companies require borrowers to have insurance coverage for the value of their house when they buy a home. While an insurer may recommend a coverage limit for your home, it is a good idea to familiarize yourself with what homeowner insurance covers, and how much coverage you should have. 

Dwelling Coverage

In the event that your home is totally destroyed by a fire, you want to make sure your dwelling coverage is enough to pay for all the costs associated with rebuilding your house from the ground up (this is not the same as the price that you paid for the property). 

To calculate how much it would take to rebuild your house, multiply the square footage of your home with the local construction costs. You can find this information on the websites of most construction companies or by asking your real estate agent. You would also have to include any attached structures, such as a deck, built-in appliances, like a water heater, and any improvements you make to the house, such as new floors or marble countertops. 

Keep in mind, the cost of rebuilding your home will be higher if you are rebuilding at a time when construction costs are high. If your whole neighborhood was hit by a massive fire, and all your neighbors are all rebuilding at the same time, it could drive construction costs up a lot. 

House burnt down interior.

Personal Property Coverage

Most homeowner insurance policies also cover personal belongings both inside and outside the home, such as furniture, computers, appliances, clothing, and other belongings that have been stolen or destroyed (except your car). You want enough personal property coverage to replace all of your belongings in case they are stolen or destroyed. 

Generally, insurance companies will set the default personal property coverage limit at 50-75% of your dwelling coverage, but the amount of coverage you need depends on how much stuff you have and how valuable it is. The best way to accurately assess the value of your property is to take a home inventory. There are many apps that allow you to take a detailed inventory of your things, along with notes about their value. Having a regularly-updated inventory will make it much easier when you submit a claim to the insurance company. 

TIP: It is easy to take an inventory of your things while you are packing them up before you move. 

Beautiful woman writing in a notebook while moving in a new home.

Liability Coverage 

Personal liability coverage will pay for any legal and medical bills that occur if someone gets hurt on your property. So if your dog bites the neighbor, your insurer will pay any of their medical expenses. Also, most insurance companies will pay your medical expenses if your neighbor’s dog bites you, so make sure to ask your insurer what they cover. 

While most insurance companies will provide a minimum of $100,000 worth of liability coverage, experts at the Insurance Information Institute recommends that homeowners purchase at least $300,00 – $500,000 worth of liability coverage. 

A male German shepherd bites a man by the hand.

Additional Living Expenses Coverage

If your house burns down, you are going to need a place to live while you are rebuilding it, that’s where additional living expense insurance (ALE) comes in.  ALE covers hotel bills, restaurant meals, and other living expenses you may incur while you are not able to move back into your house. 

Man pulling a suitcase and entering a hotel room.

Supplemental Insurance

A standard insurance policy will not pay for damages caused by a flood, earthquake, or routine wear and tear. In order to get coverage to protect against these and other damages, you may have to get supplemental insurance. 

If you are unsure of how much homeowners insurance to buy, talk with insurance companies, mortgage lenders, and real estate agents. They can help you get the proper coverage to protect you, your belongings, and your house from whatever life throws at you. 

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