The Southeastern U.S. economy grew modestly in 2013 thanks to the strengthening of South Florida’s housing market. 2013 began with significant investor activity in South Florida due to an increase in international sales from Latin America. Most of those transactions were cash sales.
Even with the improving housing market in South Florida, consumers are still cautious and on the lookout for great home deals.
So how do you know if you are getting a good deal on your home purchase?
Purchasing a home is much more complex than shopping at your local retail outlet, so knowing a good deal when you see one is harder to determine. Here are some tips to help you determine whether or not you are getting a good deal on your new home:
Comparable Sale: Your real estate agent can easily pull up a list of similar recent home sales in the area. You know you are getting a good deal if you are paying a price at or below recent comparable home sale in your area.
- Compare apples to apples
- Look at “sold” prices and not list price of comparable properties
- Compare similar transaction types such as short sale to short sale or regular equity sales to regular equity sales and so on.
- Compare number of bathrooms, bedrooms, square footage and location
List Price to Sale Price Ratio: How much of a discount were you able to negotiate off the list price? What is that ratio for comparable sales? Your real estate agent can help you calculate the LP:SP ratio for comparable home sales in your area. Or, divide the list price by the sale price to get the resulting ratio. If your ratio is higher than those of comparable properties, you got a good deal.
Property Condition: If you paid $250,000 for a home that needs $20,000 worth of repairs, you are actually paying $270,000 for the home. If that same home is worth $300,000 with repairs done, then you got a great deal.
Neighborhood: A good neighborhood supports home value over time. How do you know if the neighborhood is good? Look for well-kept yards, easy access to shopping and work and look at school ratings. A good school district helps homes in the area hold their value over time. So, if you bought your home in a good neighborhood, the deal you got is even better.
Foreclosures: Look at the number of foreclosures in the area. If there are a lot of foreclosures in the neighborhood, it is a good sign that home values are declining there and the deal you got is not as good as it seems.
Can you afford the home you purchased?
You might have negotiated a fabulous price and got all sorts of incentives thrown in, but if you are overextending your budget then the deal you got isn’t as good as you thought.