Homebuyers are always in search of the lowest price on a home purchase. The more house you can get with the smallest amount of money, the better. But snagging a great deal on a home requires a few savvy tactics aside from blatantly throwing the seller a lowball offer. If you go about things the right way, you just might be able to walk away with the home of your dreams at a price you can comfortably handle.

Here are 7 tips to help you get a great deal on a home.

1. Shop Around For the Best Mortgage Package

Before you start looking for homes, start shopping around for the right mortgage broker to work with. By doing some comparison shopping, you’ll be able to find the best mortgage package for you that offers not just the lowest interest rate, but also the lowest fees as well.

Of course, the rate you will be offered will depend heavily on your credit score. If yours is in need of improvement, you may want to take a few months to boost it before buying a home. You’ll be stuck with your mortgage – and the rate that it comes with – for years. The lower the rate, the more money you can save in mortgage payments over the long haul, which could translate into thousands of dollars.

2. Sweeten the Deal

Anything you can do to make your offer more attractive to the seller – aside from just the purchase price – can help entice the seller to accept your offer. Before you draft up your offer, find out exactly what the seller wants and needs.

For instance, have they already bought a house or accepted a job offer out of town and need to close ASAP? If so, give them the closing date they want. Do they want to stay put until their kids finish their school year? If so, push the date out to give them as much time as they require. Finding out what terms the seller is looking for and giving it to them can help sweeten the deal and get you the house at a lower price.

3. Look For Listings That Have Been Lingering on the Market

In a hot market, properties are snatched up pretty quickly. However, there may still be homes that have been sitting on the market longer than the current average. Many times homes that linger on the market are the result of inflated listing prices.

One of the biggest mistakes that sellers can make is listing too high, which inevitably scares prospective buyers off and leads to a stale listing. The longer a home has been sitting on the market, the more desperate the seller may be. In turn, they may be more willing to accept a lower price on their home just to get it off their hands.

4. Buy a Fixer Upper

If you’re willing to put in a little time and elbow grease, you may want to consider buying a fixer upper, which will more than likely come at a lower price than a home that’s move-in ready. Not only will you be spending less on the purchase price, you’ll also have the opportunity to add equity through improvements, which would bump up the value of the property. Not only that, you’ll be able to customize the home to your tastes and needs.

However, if the home is in really rough shape that will necessitate more than just a few cosmetic upgrades, it could end up costing you more than you’re prepared to spend. Have a contractor walk through the home with you before you sign on the dotted line to make sure the cost of repairs won’t exceed your budget.

5. Present Yourself as the Perfect Buyer

Obviously, a buyer’s offer is extremely important, but sellers will also want to scope out the buyer to see if they’re serious about buying and are worthy contenders for bidding on the home. In a competitive housing market, anything that you can do to stand out should be considered.

Cash buyers will clearly have the leg up against other buyers, so if you can muster up the funds to present an all-cash offer, you’ll definitely be viewed favorably in the eyes of the seller. If that’s an impossible feat for you, do what you must to line up good financing to show the sellers that you’re financially capable of closing the deal. Without financing in order, you’ll be at a disadvantage.

6. Ask the Seller to Cover the Closing Costs

If you can’t get the sellers to budge very much on the purchase price, see if they’ll help you save in other areas, such as closing costs. The expenses related to closing a real estate deal can be pretty hefty for buyers.

If you’ve presented yourself as the ideal buyer, the seller may be willing to help cover the closing costs for you which can help save you a bundle when all is said and done. Having the seller pay for your closing costs is a great way to save some money while still giving the seller the satisfaction of getting the price they want for their home.

7. Work With a Good Agent

The agent you work will play a key role in the kind of deal you get on a home purchase. Ideally, the agent you choose will have a long track record of buying in the market you’re looking in and will have lots of experience with negotiating. The real estate transaction is an emotionally charged one for the seller, so working with a seasoned agent can help put any fires out and ensure a seamless process that will end with an excellent deal for you.

The Bottom Line

With a little careful planning and the implementation of some smart strategies, getting a great deal on a home can become a reality. Start preparing for a home purchase as early as you can to get all your ducks in a row, and work with a solid agent who can provide you with helpful tips to bring the down price of your home purchase as low as possible.

Sellers have various avenues they can take to offer buyers incentives to purchase their homes, and one of them is through seller financing. Most home purchases are done with the assistance of financing in order to help make it feasible for buyers to claim title on a property, and sometimes buyers can turn to the seller themselves rather than the bank when it comes to obtaining financing for a home.

Land contracts are useful tools for sellers who may find themselves in a dip in the housing market. They’re also useful for buyers who may otherwise find it difficult to get approved for a traditional mortgage.

What is a Land Contract?

A land contract is a legal contract that’s used to buy many types of real estate and is a form of seller financing. Like a traditional mortgage, it allows buyers to finance a home purchase without having to pay all-cash. However, rather than the funds being held by a lender, they’re held by the seller – or owner – of the property that’s been sold. All regular monthly payments that would have otherwise been paid to the bank are instead paid to the seller until the purchase price has been fully paid back.

Both buyer and seller will sign a land contract that stipulates all of the terms and conditions of the sale, after which the title of the property is transferred to the buyer through a deed to convey title.

However, the buyer is essentially an ‘equitable title holder’, which means that although they have the right to full ownership of the property, they don’t yet have legal title, which is the actual ownership of the land. While both parties are bound to the land contract, the seller cannot sell the property to someone else in the meantime.

When the buyer makes the final payment and all terms of the land contract have been met, the deed will be filed appropriately and the buyer will be named the new owner.

If the buyer fails to make the required monthly payments to the seller or doesn’t fulfill the necessary duties as stated in the land contract, the seller may file what’s known as a ‘land contract forfeiture’. This essentially means that the buyer is actually forfeiting all the money that has already been paid to the seller in previous payments and will no longer have equitable title, and the seller will keep the property.

What Are the Advantages of a Land Contract?

A land contract can be beneficial for both buyer and seller. Obviously, buyers will benefit from this type of arrangement if they are unable to qualify for a conventional mortgage with a lender because of poor credit or unhealthy financial history. Making regular payments while under a land contract will give buyers an opportunity to improve their credit so that they will eventually be able to get approved for a conventional loan in the future.

For sellers, the advantage lies in the availability of receiving a passive income at an interest rate that’s often better than other types of investments. While sellers may not be receiving the full purchase price as they would if the buyer had taken out a traditional mortgage, they may be able to demand a higher purchase price and bigger down payment in exchange for the arrangement.

In addition, sellers are not required to adhere to any stringent requirements about the condition of the property that lenders usually enforce in order to protect their collateral. A land contract also makes it easier for sellers to find a buyer even when the market is in a downturn.

How Can Sellers Protect Themselves in a Land Contract?

Of course, there is a risk for sellers to who choose to sell their homes by land contract. That said, there are things that sellers can do to reduce the risk associated with an arrangement like this.

Pull the buyer’s credit report. This will tell you if the buyer has had any previous troubles defaulting on loans, has filed bankruptcy in the past, or has any other significant issues with their credit.

Check the buyer’s employment. Ask for an employment letter from the buyer’s current employer, and verify how long the buyer has been employed, whether they are considered a permanent full-time employee, and what their wages are.

Request a list of references. Speak with the buyer’s previous landlords to see if the buyer has been able to pay rent on time each month or if they were delinquent on their financial obligations.

Ask for a title insurance policy. Title searches will show if the buyer has ever had any liens or judgments filed against them.

Require a large down payment. The more money a buyer is able to come up with in one lump sum, the better the odds that they will be able to make good on their regular monthly payments.

Ask for a balloon payment. Even if the payments are amortized long-term, receiving a balloon payment periodically throughout the amortization period will permit the buyer to be able to either sell earlier to pay you back or refinance a home loan.

Require that the buyer take out a home insurance policy. The buyer should be responsible for the home while they have equitable title to it and are living in it. As such, make sure they take out a homeowner’s insurance policy so that you are protected should anything happen.

The Bottom Line

Land contracts aren’t exactly common, but they do have their place in certain situations, especially when sellers are looking to unload their homes in a market downturn and buyers are unable to secure a traditional mortgage. It’s important that both buyers and sellers weigh the pros and cons of a land contract before diving into one, which means a conversation with a lawyer and real estate professional is warranted before such a decision is made.

Slowly but surely, I’m making my way through the pizza of Chicago. It’s an arduous task, but someone’s gotta do it. This week took me to Lou Malnati’s. With 48 locations in the Chicagoland area, it’s a Chicago institution. We started our meal with the Malnati Salad: a giant bed of romaine lettuce topped with tomatoes, black olives, mushrooms, salami, gorgonzola cheese, romano cheese, and a sweet vinaigrette. The veggies were fresh and crunchy and the addition of the two types of cheese really added flavor and texture. The best part about going with a big group? Sharing. We ordered two types of pizza, one sausage deep dish and “The Lou” deep dish. It takes about 45 minutes for the deep dish to cook, so it was good we had the salad to munch on. The crust was absolutely delicious; thick, buttery, and flaky. The sausage was so flavorful, it paired perfectly with the rich tomato sauce. The Lou is served on a garlic buttercrust and is topped with spinach, mushrooms, sliced tomatoes, and a blend of mozzarella, romano, and cheddar cheese. This was my favorite! The garlic buttercrust is so tasty, you can really taste the garlic. I am usually a meat lover, but the combination of veggies was so awesome, I didn’t even miss the meat.

We went to the location in Lincoln Square (4340 N Lincoln Ave). This location is very large and has a generous number of tables. We came in with a group of five and had no wait time, even on a Friday night. Hours are Sundays through Thursdays from 11 am to 11 pm, Fridays and Saturdays from 11 am to 12 am. Lou’s does not take reservations. However, if there is a wait, you can pre-order your pizza when you leave your name with the host. This will cut down the wait time for your pizza once you’re seated. You can also order online for delivery or pick-up.

Home values have skyrocketed over recent years in many markets across the country. Homeowners who decide to sell anytime can potentially make a big profit if they have a lot more equity in the home compared to what is still owed on their mortgage.

But there are circumstances under which any profits made after a sale may be subject to capital gains taxes.

Capital gains tax is applicable to any profits – or capital gains – that are realized upon the sale of real estate minus the cost basis. The cost basis is the amount that you paid for your home plus any monies you paid to make repairs, maintain the property, and the associated costs of selling.

Not all properties are subject to these types of taxes, but many other are. It’s important to know if your particular sale would qualify you to pay any capital gains taxes before you place your home on the market. 

Here are important facts that all sellers should know about capital gains taxes before they sell.

1. Exemptions Are Only Applicable to Primary Residences

If the home you are selling is not your main residence, odds are any gains will be taxed when you sell. The IRS will want to make sure that the home you are selling is your main residence, and if it isn’t, capital gains taxes will likely be applied if you profit from the sale.

2. How Long You Owned and Lived in the Home Matters

Not only does the home have to be considered your main residence according to the IRS, it must also have been your primary home for a minimum of two out of the five-year period before you sell, which would make it a long-term asset on your books. Any less than that would deem the home a short-term asset. Capital gains on short-term assets are much higher compared to long-term assets.

However, you don’t necessarily have to have lived in the home for two straight years. You could live in the home for one year, move out for a year, then move back in for another year, just as long as it totals two years within the five years before you sell.

3. You Can Take Advantage of a Capital Gains Tax Break Many Times

There is no limit on how many times you can be excluded from having to pay capital gains. As long as you own and live in the home as your primary residence for two out of the five years before selling, you can essentially repeat the process over and over again without having to pay any capital gains taxes on any profits you make.

4. Your Maximum Deduction is $250,000

The IRS will only allow homeowners to be excluded from paying capital gains taxes up to a maximum profit of $250,000. If you make more than this amount in profits when you sell, that amount over and above the $250,000 will be taxed by the IRS.

This number jumps to $500,000 for married couples. However, they don’t have to co-own the property together — just one spouse must own the home for two of the last five years in order to qualify for this exception. If the couple divorces before the two years is up and moves out, the homeowner spouse can only claim part of that amount based on how long they actually owned and stayed in the home. For instance, the owner may claim half of the $500,000 if they only lived in the home for one out of the two years.

4. A Loss on the Sale Cannot be Deducted

When you sell a property for less than its cost basis, you will experience a capital loss. If you suffer a loss when you sell your home, the IRS won’t allow you to deduct these losses from your taxable income. The exclusion is only applicable to capital gains.

5. You Don’t Have to Report Any Gains in Most Cases

If you and your home qualify for exemption from capital gains taxes, then you don’t have to report any gains to the IRS. If only part of the gain can be excluded, however, you may have to report your gains.

6. You May Be Excluded From Capital Gains Taxes For Unforeseen Circumstances

There may be times when you will be forced to sell your home before the two out of the five years is up before selling. In certain cases, the IRS may grant you a full exclusion from the taxes on an early sale. Some of these situations may include death, job relocation, loss of a job, damage to the home as a result of a natural disaster or act terrorism, or seizure of the home from the government.

The Bottom Line

Having to pay capital gains taxes on the sale of your home can be an unpleasant surprise if you aren’t expecting them. That’s why it’s important to get informed about these and other types of taxes that may apply to you. While the information in this article is meant to enlighten you on the potential to pay capital gains taxes and the circumstances that may exempt you from them, it’s in your best interests to speak with your tax professional in order to remain compliant with the IRS.