Like other buyers, you want to save money while purchasing a home. You're likely making the biggest purchase of your life, and you might not understand the significance of the figures mentioned. And to make matters even more complicated, a good deal might mean many things to various individuals and in various settings. To determine whether you're getting a decent deal, you must ask the correct questions of yourself. So continue reading to learn how to determine whether you are getting a decent deal on a home in Chicago, IL.
What Does a “Good Deal on a House” Mean to You?
Determine what a "good deal" means to you in order to determine whether you're getting a good deal on a house in Chicago. It might not be as simple to understand as it first appears, and different buyers may interpret it very differently.
For instance, "[i]s it a good deal for you to choose the house of your dreams from among the available options at a cost you can afford? Is it paying 30% less for a house than what the previous owner paid for it? Is it a deal, in the sense that you save money compared to what the house would normally sell for? Because real estate is about life, and whether YOUR real estate results are good or poor is about YOUR life, what is a wonderful deal to one buyer may not be to another. In order to determine whether you're getting a fair deal, you must first understand your own particular priorities for the transaction.
What Do the “Comps” Tell You?
For the majority of purchasers, a good deal on a house will be based on pricing. They want to obtain the greatest price or, at the absolute least, an acceptable price, which is understandable.
But it's important to remember that a home's price doesn't exist in a vacuum; rather, to determine whether it's a "good" price, one must compare it to a few pricing benchmarks.
“The market value of the residence is the most crucial and challenging of these standards to understand. The easiest way to determine market value is to look at what recently sold comparable homes in the neighborhood. Market value is defined as the amount a qualified buyer is willing to pay for the property in an arms-length, open-market transaction. (The better options are those that are more comparable, nearby, and recent.)”
A comparative market study, often known as "comps," is the most crucial tool for figuring out a home's fair market worth because it compares it to nearby comparable previously sold homes and their sale prices. When making an offer on a home, "[a]sk your real estate agent for what's known as a Comparative Market Analysis. The ideal scenario, if you're buying, is for your negotiated purchase price to be at or under the home's value, as shown by the comparable and the CMA.
To talk to a Chicago about performing a CMA to determine whether you’re getting a good deal, just call (773) 360-3470.
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 Chicago is the list-price-to-sales-price ratio (LP:SP).
“How big of a reduction you were able to negotiate off the list price is one indicator of a good deal, especially when compared to the average negotiation strength of purchasers in your area. Make the math to see if your deal is a good one! See what ratio is produced by dividing the list price of your home by the sale price. Your LP:SP ratio should ideally be no lower than average; the higher it is, the better your negotiating skills were.”
“Your agent can help you calculate the typical LP:SP ratio for the comps.” To discover more about this, contact a Chicago, IL agent at (773) 360-3470.
Are You Getting Any Extras?
As we mentioned before, what constitutes a good deal on a house varies depending on the buyer. Some purchasers are more concerned with the extras they are receiving in the agreement than the actual sale price. This is particularly true in the current seller's market, where there is little available inventory, demand is high, and property prices are rising.
[I]f the seller is paying part or all of your closing expenses, HOA dues, including extra furniture/appliances, or otherwise sweetening the deal, keep that in mind. Therefore, "[d]on't forget whatever extra bang' you're getting for your buck. In the real estate market of today, where buyers are constrained by appraisal standards that many perceive as being too conservative and sellers are constrained by their upside-down mortgages, a "good deal" may simply be 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.
“In the end, even the best deal isn't a good deal if you are stretching yourself beyond the limits of your personal budget. You can negotiate an amazing price and get all kinds of incentives thrown in. You should "(a) have clarity on the maximum 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," according to experts, in order to avoid becoming financially overextended.”
Are You Working With an Experienced Chicago Agent?
The last, and possibly most crucial, question you should ask yourself to make sure you receive a fair bargain is whether you are working with an expert realtor who is well-versed in the neighborhood market. A skilled negotiator and knowledgeable agent can significantly increase your chances of securing a favorable deal. So be sure to get in touch with us at (773) 360-3470 if your objective is to find a good deal on a home in Chicago, IL.
