When home prices are fluctuating wildly, it can be hard to determine if you are getting a good deal, but there are clues to follow. A good deal is more than just a price tag! Here’s how to figure out if the home you want is really a good deal or not.
Always Check the “Comps”
Comps in real estate stands for “comparable sales”. It’s an apples to apples comparison not just homes in the same neighborhood, but homes that have multiple similarities, such as age, size, number of bedrooms and bathrooms, square footage, and condition.
You can find comps on real estate listing sites by looking at recent home sale prices in the area (not asking prices) but you can get a better idea from your buyer’s agent.Transaction types are important: you can’t get an accurate grasp on home values in a market if you’re comparing foreclosed homes with short sales with new builds.
Double Down by Looking at The LP:SP
The list price to sale price ratio for the comps you are reviewing is a deeper layer that can provide even more information. How much are buyers getting sellers to come down?
Divide home list prices by sale prices, and hope to see lower LP:SP ratios. This could mean a buyer’s market, and that you’ll get a better deal on a home that current asking prices indicate.
If you see high LP:SP ratios, you’re in a seller’s market, and you may need to gear up for a bidding war. This is where the “deal” you are looking for is based more on your dream home and less on actual cost.
What About Your Finances?
Once you’ve looked outward, look inward. Can you afford to buy a home in the neighborhoods you are hoping for? If not, you may need to reconsider your plans. Overextending yourself can lead to disaster when it comes to real estate. Your dream home is a decades long commitment. A good deal isn’t a good deal if it bankrupts you down the road.
You can avoid this by setting a conservative upper limit for your house hunt, and a hard top limit if you end up needing to up an offer. Don’t even bother to look at homes listed far outside your range, and hesitate before you risk falling in love with a house that is perfect in every way except price.
A fixer upper can financially ruin you, no matter how good a deal it seems on the surface. Unless you have unlimited funds and lots of home improvement savvy, make sure that home inspection comes up clean.
Finally get pre approved and find out what your monthly mortgage payment will be before you look at a single house. This will help you stay on track and get the best deal possible.
Your Sammamish Mortgage Loan Officer Can Help You Start the Preapproval Process Today!
We’ve fine-tuned the preapproval process to make it one of the easiest experiences you’ll have in the whole home buying process. Buying a home should be fun and exciting, not stressful. Get preapproved today!
Sammamish Mortgage has been in business since 1992, and has assisted many home buyers in the Pacific Northwest. If you are looking for mortgage financing in Washington State, we can help. Sammamish Mortgage offers mortgage programs in Colorado, Idaho, Oregon and Washington.
Contact us if you have any mortgage-related questions or concerns. If you are ready to move forward, you can view rates, obtain a customized instant rate quote, or apply instantly directly from our website.