Achieving the American dream of home ownership comes with a pretty hefty price tag these days. In fact, the cost of housing is on the rise, especially for the middle class – and renters have the worst of it with rents rising for the past 23 consecutive quarters. As most everyone knows, Texas is booming and people and companies alike are moving here in droves which is great for the economy but for people considering purchasing a home, the task can be daunting because along with population growth comes lower inventory and higher prices – and not only that but more competition overall for homes. For the past 2 years we have seen bidding wars for homes that are well priced all over Texas with only a day or two on the market.
So how can you purchase a home just a little smarter than the next guy? I have some great tips that will save the average homebuyer THOUSANDS of dollars – and one very special tip that you probably never even knew existed.
I’ll start with the best first.
1. DID YOU KNOW THAT IN TEXAS IT’S LEGAL FOR REALTORS TO SHARE THEIR COMMISSION WITH THEIR BUYERS? Yes, it’s true! Realtor rebates aren’t legal in every state but they are in Texas and most people are completely unaware that commission rebates are available to them. Don’t expect your Realtor to offer this option to you…in fact, most are hoping you never find out that this business model exists.
WHAT IS A COMMISSION REBATE? Well, if you buy a home and a Realtor represents you, obviously, they make a commission for doing so. Keep in mind that commissions are always paid by the seller – or builder if you’re buying a new construction home, not the buyer. So basically if you’re working with an agent that shares their commission, they would in turn credit a portion of their commission with the buyer. This commission rebate can be credited to the buyer’s closing costs or can be given after closing via wire transfer for the agreed upon amount. This greatly reduces the buyers out of pocket expense! See what the Dept. of Justice has to say about Commission Rebates
Sharing commissions is not new, however, most people still don’t know that it exists or really understand the process. In fact, it’s quite simple – hire an agent to represent you that offers rebates and then get a credit at closing when you buy a home. Find out More about Commission Rebates – rebate amounts vary – some agents offer 1% of the total sale price – others offer more. My company, Texas Homes 2.5% Rebate offers the highest rebate of any brokerage in Texas. The highest rebate we offer is 2.5% of the total sale price on new construction homes anywhere in the state of Texas. We offer 1-2% on pre-owned homes (depending on the price point) and we also offer huge discounts on listings.
So let’s say for example, you’re buying a new construction home through a builder, anywhere in Texas – you’ve already done your homework and you know the area, the community, maybe even the builder you want. Maybe you’ve already found the home of your dreams, perfect! Before you sign a contract with a builder or an agent, contact me and I will represent you on the purchase. In turn, I will credit you 2.5% of the total sale price at closing. For instance, if you’re buying a home for $300,000, your rebate would be $7,500! Calculate your Savings – that should almost cover your closing costs entirely! If you’re buying pre-owned the credit is between 1-2% of the total sale price (2% for purchases $400K and above). A huge savings!
Read what our clients have to say about working with Texas Homes 2.5% Rebate: See What our Customers are Saying!
For more information on commission rebates, please contact me anytime and I’ll be happy to explain everything in more detail! Contact me for more info.
Of course there are several other ways to save when you purchase a home that you might not be aware of:
2. CUT OUT THE PMI (private mortgage insurance) – if you borrow more than 80% of the value of the home, you normally have to pay for private mortgage insurance to protect the lender. PMI typically costs between .5% and 1% of the loan amount. So for example, if your loan balance is around $140K, you could be spending as much as $1,400 for PMI in just one year! The best way around this is to put down at least 20% towards the down payment. Maybe this means spending less on the home – just multiply your down payment by 5 to arrive at the highest price you can pay and still avoid PMI.
Some lenders still offer 80/10/10 loan programs. This structure allows you to borrow 80% and then borrow another 10% as a 2nd mortgage (sometimes from the same lender) but you generally need a credit score of 700 or higher to qualify for this type of loan program.
3. PAY THE LOAN OFF QUICKER – if you’ve already purchased a home, you can speed up those payments to get the balance under 80% of the value and then you can request that the lender drop the PMI payments. Lenders don’t always agree to drop the insurance requirement so if this happens, it’s time to refinance provided that the rate is low enough.
The law says that lenders MUST drop the PMI when the buyer is scheduled to reach a balance of 78% of the homes value at the time of purchase as long as payments are made on time. If you’re at this point, make sure that your PMI has been dropped.
4. BUY A LESS EXPENSIVE HOME – Buying a less expensive home not only helps with making a larger down payment but also reduces many other costs as well. Don’t be house poor. Payments and interest charges will of course be smaller on a smaller loan amount. You’ll also save on property taxes and insurance – and most likely on maintenance and utilities.
5. BUY NEW CONSTRUCTION IF POSSIBLE – Simply put, you’ll have no deferred maintenance and less expense for repairs. Most builders offer a 2 year warranty on materials and workmanship and up to 10 years on major structural elements.
6. AVOID FLOOD ZONES – the extra insurance required can be quite costly – unless you just have your heart set on a home located in a flood zone, look elsewhere! This can save you thousands per year.
7. SHOP AROUND FOR INSURANCE – premiums vary and it’s worth shopping around before you lock in with an agent. A good Realtor should be able to point you in the right direction.
8. ALWAYS HAVE A HOME INSPECTION DONE – ALWAYS! Even on new construction homes. Many of my clients think they don’t need an inspection when purchasing a new home through a builder but it’s just good business to get one done. The cost is around $400 and well worth it. Again, a good Realtor can give you some good referrals on who to use.
So in closing, remember…BUY SMART and take the time to learn about commission rebates when buying a new home in Texas – this one tip alone will save you thousands of dollars on your next home purchase! Learn about Commission Rebates
and find out how you can save THOUSANDS on your next purchase!
CALCULATE YOUR SAVINGS
Receive a rebate when buying a new home!
Earn a rebate of 2.5% of the total sale price, on any new construction home, through any builder, anywhere in Texas! Since you helped in the search, shouldnÕt you share some of the commission paid by the builder? Rebates on pre-owned homes are up to 1.5%!
Calculate Rebate ($)
2.5% REBATE EXAMPLES ON NEW HOMES
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