How can you know whether you’re receiving a fair price for your house when the time comes to sell? You and your real estate agent can do a few things to shift the scales in your favor.
Get a list of comparable listings for similar houses that have sold in your neighborhood in the previous six months. Unless there are just a few houses within a 12-mile radius, or you reside in a remote location with fewer homes, limit your search to houses within a 12-mile radius. To accurately assess the worth of your property, compare similar characteristics, style, age, and square footage of these properties to yours.
In a seller’s market, you may be able to add 10% to the latest comparable apartments for rent in Tupelo’s, MS sale in your neighborhood. If there is a low inventory on the market, your house may sell for a greater price.
Here are the three actions you may take to see if you’re receiving a decent bargain on your home:
1. Examine The Competition
It’s hard to determine whether you’re getting a decent deal on your house until you examine the “comps,” real estate jargon for similar sales. When you input an address, most major real estate websites will provide recent sales prices of similar, nearby properties; buyer’s brokers frequently include comparative sales data as well.
When you pay a price that is close to or below the recent sales prices of the “comps,” you know you’re getting a fantastic bargain on a home. When comparing your pricing to the comps, though, make sure you’re comparing apples to apples:
Look for ‘sold’ prices of comparable houses, not just list prices;
Check that you’re comparing your deal to similar transaction types — foreclosures to foreclosures, short sales to short sales, “normal” equity sales to the same — and that the “comps” are genuinely comparable in terms of bedrooms, bathrooms, square footage, location, and condition.
2. Examine the list-to-sale price ratio (LP: SP)
One indicator of a good deal is how much of a discount you were able to get off the advertised price, especially when compared to what negotiating power is typical for buyers in your area.
Do the arithmetic to find out if your transaction is a good one! To get the percentage, divide the asking price of your home by the sale price. Your LP: SP ratio should ideally be no lower than normal; the greater it is, the more probable it is that you successfully bargained.
3. Are you able to afford it?
Finally, you may negotiate an incredible price and get all sorts of bonuses thrown in, but if you are beyond the limits of your budget, then the finest offer is not a good deal. Some buyers have a habit of starting with a cautious personal price limit lower than the maximum they are approved for, then gradually increasing their “top dollar” throughout the property hunt.
The best way to avoid this is to (a) determine the maximum housing costs your finances can bear before you begin looking at homes, and then (b) double-check with your mortgage professional on what your down payment, monthly payment, and closing costs will be before you submit an offer or agree to a price.