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The bigger the purchase, the bigger the bargain potential. But home purchases are much more complex than everyday retail transactions, so it can be much tougher to know whether you’re actually getting a good deal on your home, or not.
Here are three ways to determine if you are getting a good price on a home:
- Check the Comps
A Comp is a real estate term and is an abbreviation for “Comparable Sales.” These are recently sold, or currently for sale, homes that are similar to the property you are trying to buy. These should be similar in location, size, features and condition. Comps are used to determine a homes fair market value by using the sales comparison approach to pricing property. You know you are getting a good deal if you’re paying a price near or below these comps.
- Check the List Price to Sale 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 what negotiating power is typical for buyers in your area. In today’s seller’s market, it’s normal to see an LP:SP ratio below 1 (meaning that homes sell for more than their asking prices, on average).
- Can You Afford It?
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 a good deal.
From an article on Time.com – Click Here for the Rest of the Article
