10 Ways to Get a Deal on a New Home

Home prices soared in 2020 and 2021 as a once-in-a-lifetime pandemic sparked a rush into home spending, especially outside urban markets. While a number of commentators believe prices could cool off in some markets, home price growth remained strong through May, according to the Case-Shiller National Home Price Index.

For prospective homebuyers, a spike in mortgage rates has made it even more costly to buy a new home. However, there are ways to get a deal on a new home. Keep reading to see 10 of them.

5 Stocks Under $49

Presented by Motley Fool Stock Advisor

We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

If the listings on Zillow and Redfin are too pricey for your tastes, you may want to consider buying a home off-market, or unlisted. If you're not keyed into the real estate market yourself, you'll need a real estate agent to source out available homes for you.

Some sellers sell off-market because they don't want to deal with the hassle of prepping their home for a sale, opening it up to hordes of prospective buyers, or dealing with multiple offers. Often, these homes may need more work, but you're likely to get a lower price than you would from an on-market listing. You can also avoid bidding wars, which will help you save money as well.

ALSO READ: How To Start Investing in Real Estate: The Basics

If your dream location is too expensive, you may want to consider buying in a nearby up-and-coming neighborhood. Sometimes, a similar property nearby, maybe even less than a mile away, can sell for considerably less.

If you're planning to live in the home, you'll want to be sure you feel comfortable in that neighborhood. But buying near an expensive neighborhood can be a good way to get a fast-appreciating property as the new neighborhood could gentrify over the coming years as other homebuyers priced out of the expensive area buy in the new one.

The best deals are often on homes that need work, and foreclosures offer a perfect example. These are bank-owned properties, and banks are usually eager to get them off their balance sheets -- meaning they're underpriced relative to their market value. According to the National Association of Realtors, foreclosed homes were selling for an average of 20% below market value in May 2020, giving the buyer significant savings.

Similar to a foreclosure, another option is a short sale, which means the home is sold for less than what's owed to the lender. These homes, considered in pre-foreclosure, have generally fallen into disrepair and are worth less than what's owed on the mortgage. As part of the short sale agreement, the lender agrees to forgive the remaining mortgage balance.

Purchasing a short sale is more complicated than a typical real estate transaction since you must also deal with the seller's lender. But it's a good way to find a cheap price on a new home.

ALSO READ: What Is a Short Sale?

The housing market is typically busiest in the spring as landscaped properties often look most attractive with fresh greenery and new spring flowers. It's a nice time of year to be outside exploring the area, meaning buyers are more interested in touring homes.

But it can be easier to find a deal in the off-season, which will depend on where you're looking to buy. Typically, that would be in the late fall or winter. Sellers listing at that time of year are more likely to be in a hurry to sell, and you're less likely to face competition from other buyers.

5 Stocks Under $49

Presented by Motley Fool Stock Advisor

We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

In retail, merchandise that doesn't move tends to get discounted; the same is true for real estate. If you're looking to get a deal, it makes sense to look for homes that have been sitting on the market for a while, at least a few months. Depending on the market you're looking in and the time, there could be several of those homes available.

Because those properties haven't sold at the listing price, the seller should be more willing to negotiate than they would be if the listing had just gone on the market.

Some properties are sold "as is," meaning the seller is unwilling to make any upgrades as part of negotiations.

Like short sales and foreclosures, these houses are sold at a discount because they generally need some work. Often, an inherited property will be listed "as is" because the new owner doesn't have the means or the interest in renovating and just wants to convert it into cash quickly.

ALSO READ: Can You Find a Bargain in Today's Housing Market?

If you're cost-conscious, you'll want to consider property taxes in your search. Though they won't appear as part of the listing price, they could be a significant part of your monthly payments, especially if you're prioritizing a good school district.

If you don't have school-aged children, you're probably better off shopping in an area with low school taxes. Do your research on the towns in your area to find out which ones check that box.

Next to which home you choose to purchase, the most important decision you'll probably make in the house-hunting process is choosing your real estate agent. It's a good idea to interview several real estate agents to find the best fit for you.

If you're looking for a bargain in the housing market, ask the real estate agent about their strategy for finding below-market properties and whether they've had success in the past. Finding a real estate agent with the time and attention to work with you is important as you may need to visit several properties to find the right one.

If you're willing to be a little entrepreneurial, one way to get a deal is to find a home before it's listed. Soliciting absentee owners -- owners who aren't occupying the house -- is a good place to start. The owners may be landlords renting out the house, they might have just inherited the house, or they could be owners who use it only seasonally.

You can start by looking around your neighborhood to see whether any houses look unoccupied. It's also worth finding rental listings and asking the owner whether they're interested in selling. A rental property that's in between tenants is well positioned for a sale, and an owner who's thinking about selling might take your offer.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

While the housing market has boomed over the last two years, there are signs of an economic slowdown, and that could affect the housing market. That's good news for prospective buyers as homes are starting to sit on the market longer, and higher mortgage rates are causing some Americans to delay buying homes -- another piece of good news if you're able to buy in cash.

Keep some of the tips above in mind next time you're shopping, and you could get a great deal.

Jeremy Bowman has positions in Redfin. The Motley Fool has positions in and recommends Redfin, Zillow Group (A shares), and Zillow Group (C shares). The Motley Fool recommends the following options: short August 2022 $13 calls on Redfin. The Motley Fool has a disclosure policy.