You, like every other buyer, want to get a good deal when buying a house. It’s likely the largest purchase of your life, and you may not know where those numbers are coming from that get thrown around. And to further complicate matters, a good deal means different things to different people and in different contexts. So you must ask yourself the right questions to know whether you’re getting a good deal. Read on, then, to find out how to know if you are getting a good deal on a house in Redlands.
What Does a “Good Deal on a House” Mean to You?
The first step toward knowing whether you’re getting a good deal on a house in Redlands involves determining what “good deal” means for you. It may not be as easy to figure out as it seems on the face of it, and it can mean very different things to different buyers.
For example, “[i]s a good deal [for you] getting the home of your dreams, over multiple offers, at a price you can afford? Is it buying a home for 30% less than its current owner paid for it? Is it getting a bargain, meaning you get a discount off what the home is worth on the open market? . . . What is a great deal to one buyer . . . may not be to another, because real estate is about life – and whether YOUR real estate outcomes are good or bad is about YOUR life! So, the first step to knowing whether you’re getting a good deal is to know what your own personal priorities for the transaction are.”
What Do the “Comps” Tell You?
A good deal on a house for most buyers will be related to price. They want (understandably) to get the best price possible or at the very least to get a reasonable price.
It’s important to keep in mind, though, that the price of a home doesn’t exist in a vacuum – “to understand whether it’s a ‘good’ price, you’ve got to compare it with a few pricing benchmarks.”
“The most important of these benchmarks is also the most difficult to get a handle on: the market value of the home. The definition of ‘market value’ is the price a qualified buyer is willing to pay for the property in an arms-length, open-market transaction; the best way to estimate market value is to look at what similar homes in the area have recently sold for. (The more similar, the more nearby, and the more recent, the better.)”
And the most important tool for determining a home’s fair market value is a comparative market analysis, called “comps” because of the comparison to comparable recently sold homes and their sale prices in the area. “[A]sk your real estate . . . agent for what’s called a Comparative Market Analysis on the home you’re making an offer on . . . If you’re buying, the ideal situation is for your negotiated purchase price to be at or below the home’s value as indicated by the comparables and the CMA.”
To talk to a Redlands about performing a CMA to determine whether you’re getting a good deal, just call (951) 232-9704.
What Is the List-Price-to-Sale-Price Ratio?
Another tool to help you figure out whether you’re getting a good deal on a house in Redlands is the list-price-to-sales-price ratio (LP:SP).
“One measure of a good deal is how much of a discount you were able to negotiate off the list price – especially relative to what negotiating power is typical for buyers in your area. . . . To determine whether your deal is a good deal, do the math! Divide your home’s list price by the sale price, and see what ratio results. Ideally, your LP:SP ratio should be no lower than average; the higher it is, the more likely it is that you negotiated well.”
“Your agent can help you calculate the typical LP:SP ratio for the comps.” To discover more about this, contact a Redlands agent at (951) 232-9704.
Are You Getting Any Extras?
As we indicated early on, a good deal on a house is different for different buyers. For some buyers, it has less to do with actual sale price and more to do with the extras they’re getting in the deal. That’s especially the case in the current seller’s market where inventory is low, demand is high, and home prices are increasing.
So “[d]on’t forget any extra bang’ you’re getting for your buck. . . . [I]f the seller is paying some or all of your closing costs, HOA dues, throwing in extra furniture/appliances, or otherwise sweetening the pot, keep that in mind. . . . In today’s real estate market, where sellers are constrained by their upside-down mortgages and buyers are constrained by what many see as too-conservative appraisal standards, sometimes a ‘good deal’ is simply one where the other side gives, even a little, to get you something that you want or need to make the deal work for you.”
Can You Actually Afford It?
No matter how great the deal on a house seems, if you can’t really afford it, it’s not a good deal for you.
“Ultimately, you can negotiate an amazing price and get all sorts of incentives thrown in, but if you are overextending yourself beyond the bounds of your personal budget, then even the best deal is just not a good deal.” To avoid winding up financially overextend, experts recommend that you “(a) have clarity on the max housing costs your personal finances can bear before you start looking at homes, [and] then (b) double-check with your mortgage pro on what your down payment, monthly payment, and closing costs will be before you submit an offer or agree to a price.”
Are You Working With an Experienced Redlands Agent?
A final (though perhaps the most important) question you should ask yourself to ensure you get a good deal is whether you are working with an experienced agent who knows the local market inside and out. A good agent will know all the strategies and tactics and possess the negotiating skill to vastly improve your chances of getting a good deal. So if your goal is to get a good deal on a house in Redlands, be sure to contact us at (951) 232-9704.