The median home sales price in the US hit $420,321, marking a 4.8% increase YoY. In expensive markets like California and the Northeast, a household needs over $160,000 to afford a home. But if you are looking for cheap houses to buy, there are still some options available.
Houzeo has compiled a list of the ways to find cheap houses to buy in the U.S. We can help you fulfill your dream of homeownership in your favorite state without spending a fortune.
7 Strategies to Find Cheap Houses to Buy
Here are 7 strategies that can help you identify cheap houses to buy in 2024.
1. Old Listings, Ghost Towns, Far Flung Areas
You can buy properties that have been on the market for a long time for cheap. These sellers might be willing to negotiate a lower price since they haven’t had other offers.
If you are flexible about where you live, you can consider buying a property in a far-flung area. These areas are typically cheaper than those in urban cities. For example, the typical home price in Bluefield, West Virginia is $98,953, much lower than the national average.
2. Consider a Fixer-Upper
Another option to consider is a fixer-upper property. A fixer-upper is a home in need of renovation or repair to improve its condition. This is the reason why they offer a significant discount compared to move-in-ready properties.
According to Porch, fixer-uppers cost $225,000 on average, which is 45% less compared to new homes. In some parts of the US Midwest, about 15 cities feature fixer-uppers priced at less than $100,000.
3. FSBO Platforms
For Sale by Owner (FSBO) platforms let sellers list their properties without agents. This means sellers might offer lower prices since they don’t pay agent commissions. Typical agent commissions are 5-6%, split between the seller’s and buyer’s agents.
NAR reported that FSBO homes tend to sell for less than those with Realtors. The median home price of an FSBO home sold in 2023 was $310,000 compared to $405,000 for agent-assisted home sales.
4. Foreclosure Sites
Foreclosure homes offer another way to buy cheap houses in 2024. Banks and lenders list foreclosed properties at discounted prices.
However, the downside is that you cannot inspect foreclosed homes before the auction purchase. So you won’t know the condition or how much it might cost for repairs and renovation.
It is only when you win at the auction you are allowed the home inspection but cannot negotiate the price. You either accept the house or walk away.
5. Short Sales
A short sale occurs when the lender agrees to sell the property for less than the amount owed on the mortgage. This situation arises when the homeowner faces financial hardship and cannot afford their mortgage payments.
Short sales can be a great opportunity for motivated buyers to secure a home at a reduced price. It also helps the seller avoid foreclosure.
6. Government Programs
If you are on a tight budget you can also consider government programs. That is because these programs allow people to buy houses at discounted prices.
One such program is Good Neighbor Next Door. It helps teachers, firefighters, law enforcement officers, and other public servants buy homes in the HUD revitalization areas. Properties in these neighborhoods are often sold at a 50% discount.
7. Consider As-Is Homes
Consider buying an “as-is house”. These houses are sold cheaper because the seller won’t make repairs before you move in. Unlike fixer-uppers, which are priced lower due to needed renovations, offering the potential for increased value after upgrades.
However, be sure to consider the repair costs when calculating the total price of the house. The average cost of repairs and renovation in 2024 is $41,600.
Financing Options to Buy Homes for Cheap
Finding a cheap listing is just the first step. Securing affordable financing is crucial to buying a cheap house within your budget. Let’s explore financing options next!
1. Government-Backed Mortgage Programs
Many first-time and low-to-moderate-income homebuyers can take advantage of government mortgage loans that require low or no down payments. Here are a few options you can check:
- FHA Loans: Ideal for first-time buyers or those with moderate credit. You can qualify with a down payment as low as 3.5% and a credit score of 580 or higher.
- VA Loans: A fantastic benefit for veterans and active military personnel. VA loans require no down payment, although lenders may have minimum credit score requirements.
- USDA Loans: Perfect for those seeking homes in designated rural areas. USDA loans also eliminate the down payment hurdle, but income restrictions may apply.
These programs come with specific eligibility requirements. Be sure to research each program and consult a mortgage professional to determine if you qualify.
2. Down Payment Assistance
Several states and local programs provide down payment assistance and closing cost assistance to make homeownership more accessible.
These programs offer grants or low-interest loans that can cover a significant portion of the upfront costs. First-time homebuyer programs are especially helpful for bargain hunters with limited savings.
3. Seller Financing
Seller financing allows you to buy a house directly from the owner, who acts like your lender. This can be helpful if your credit score isn’t perfect. Typically, interest rates for seller financing are a few points higher than traditional mortgages.
But the good news is, that you might need a smaller down payment. It could be between 10% and 20%, compared to the usual 20% or more. However, the payoff period is usually shorter, lasting between 3 to 7 years.
4. Rent to Own
Rent-to-own offers another way to become a homeowner. You rent the house with the option to buy it down the road. A portion of your rent, typically 10% to 30%, goes towards the eventual purchase price.
You might also pay an upfront fee of 1% to 5% of the purchase price. This secures the right to buy the house at a set price by the end of the lease. This lease usually lasts between 1 to 5 years.
Hidden Costs to Consider When Buying a Cheap House
Securing a cheap house and financing are key steps, but beware of hidden costs that can come with such properties:
1. Repairs and Renovations
Cheap houses often come with the need for renovations or repairs, whether minor or major. Fixer-uppers, foreclosures, and as-is properties frequently require work to bring them up to acceptable living standards.
Renovation costs can vary widely due to factors such as the scope of work, property condition, location, etc. This can lead to smaller projects like a bathroom remodel averaging $70 to $250 per square foot.
2. Property Taxes and Insurance
Homeownership comes with additional costs like property taxes, homeowner’s insurance, and owner title insurance. Property taxes are a yearly fee based on your home’s value. New Jersey has a high median property tax of $8,928, while Alabama is taxed lower at $742.
Homeowner’s insurance typically costs around $1,678 annually but can vary depending on your specific situation. Title insurance is a one-time cost that protects you from ownership issues.
3. Closing Costs
Closing costs can hit you with a surprise at the finish line. These include fees paid to your lender, title insurance, and even taxes on the transfer of ownership. The average closing costs are around 2% to 5% of the total purchase price, so you can factor them into your budget.
Bottom Line
Buying a cheap house in 2024 is possible if you’re willing to get creative, and expand your search areas.
However, you must also consider the investment required to make it move-in ready. You must consider your long-term financial commitments and available cash at hand when seeking cheap houses to buy.
Find Cheap Houses to Buy in the US Under Your Specific Budget
FAQs
How can I buy a house for cheap?
To buy a house for cheap, consider looking for as-is homes or short sale homes. These properties are often sold at lower prices but be prepared for potential repair and renovation costs.
How to find a cheap property for sale?
To find cheap property for sale, check out FSBO (For Sale By Owner) platforms like Houzeo. These sites often have listings within your budget, including older listings or properties in more remote areas.
Where is it cheap to buy a house in the USA?
One of the cheapest places to buy a house in the USA is Rockford, where the median home sales price is just $141,710.
» Cheapest Places to Live in USA: Discover homes and locations that might be a perfect fit for your budget and lifestyle.
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