Deal or no deal: How to decide if the home you love is worth it
Making an offer on a home – like many life decisions – is a bit of a gamble. Even if you take your time, do your homework, and play it safe, how do you know that a “great deal” isn’t about to come on the market? One could stall forever, comparing home to home, but at some point you have to make a leap and make an offer on a home for sale.
There are many homes that could work for you, but consider both your timeframe and your budget. Do you need to buy this summer in preparation for the school year? Do you need to stick to a price cap, even if a “great deal” comes along that would put you over? Knowing where you stand on these factors will help you determine what’s a good deal for you.
Assess the Home
A “deal” is about more than the dollar amount. Price reflects a combination of dynamic factors, such as the neighborhood and the particular features of the particular home. It’s not enough to put two 3 bedroom, 2 bath homes next to each other and see which has the lower price. Here are some questions you can ask yourself:
· Is it priced fairly? – Get a general sense of the accurate pricing of the home by comparing it to other, similar homes that are located in the same or a comparable neighborhood.
· What are the costs of any repairs versus the benefits of any repairs? – Sure, the home you’re interested in may need some work in the backyard, have funky appliances, or have a really awkward layout… but if you spend some money on the exterior landscaping, update the appliances, or knock out a wall to create an open flow, how much will the home appreciate?
It all depends on how much work needs to be done, how major, how expensive, and how much of it you could do yourself. Just because a home needs some work doesn’t mean it’s a “bad deal.”
· What’s the home like face-to-face? – We’ve said it before, and we’ll say it again: pictures don’t tell you the whole story. As we mentioned several weeks ago, sometimes there are hidden gems that are not captured in the listing photo. Go visit a home to get the most information on what it has to offer.
Consider the Market
· What’s happening on a local level? – This may be harder if you’re buying from out-of-state, but try to read local papers and blogs to get a sense of which areas are just becoming hotter. If you get in early and a neighborhood trends upward, you may find your home appreciates quite a lot!
· What kind of market is the home in right now? - You may need to ask for some insight from your local expert, because market hotness varies from zip code to zip code! Much of the country has limited inventory right now, making competition fierce and sparking bidding wars. A “good deal” in one of these markets may still be over the asking price.
· When can I get the best deal? – On a general level, the real estate market is sluggish in the winter months, meaning sellers may slash their prices even more. Then again, in “winter bird” markets like Orlando or Phoenix, this doesn’t apply to the same degree. Know the housing market weather patterns of the place you’re trying to buy.
Other Questions to Ask
· What’s the price per square foot? - Price per square foot is not necessarily the best tool for comparing homes, though it can be helpful for trying to get a sense of pricing for two homes with similar features and size. It shouldn’t be a deciding factor.
· What’s the seller offering? – Is the seller offering any deal sweeteners like furniture or paying for the inspection? Think about how much these things are worth to you before blindly signing on a home just because it comes with freebies.
Above all, consult the help of your agent. They should have a sense of the market and experience with the “appropriate” pricing of homes. They’ll be able to give you professional guidance on whether the home you love is a deal or no deal.