Property Grunt

Monday, January 03, 2005

How do I know I have a good deal?

I often see this commercial with Erik Estrada talking about buying real estate in the boonies somewhere calling it a great deal. But why is it a great deal? Just because Ponch from “Chips” says so doesn’t make it so. How do you know what is a great deal?

Simple: Comparables which are a record of properties that have been as listed as being on the market or sold and used as comparisons to determine the value of a certain property.

Comparables also allow you to figure out how to put down the best offer but according to this link you have to know how to get them.

Welcome to the world of comparables. Here's how it works: If two identical homes are on the market and one sells for $250,000, which will be a big factor in the cost of the second home.

In real life, however, two houses are seldom identical. And the differences -- such as an updated kitchen or poor maintenance -- can make a big difference.

So, if you're interested in a neighborhood, you need to know what's selling, for how much and how long it's on the market.

Realtors usually have a record of homes sales, their duration on the market before it was sold and description of the home. Getting this information gets a little tricky. According to this site some brokers will require a formal agreement.

In Manhattan comparables are easy to acquire for buyers and especially sellers. The major brokerage companies have enormous databases that contain copious amounts of information on the real estate market. And they are more than happy to share it with you especially if you are a seller in order to entice you to sign them as their exclusive broker. It’s important to get as many comparables as possible that fit your requirements that way you will have a better idea of the market.

Information you should present to the broker.

Where you are looking to live?
What type of building, coop condo?
What is your budget?
What can you afford in terms of maintenance?
How much can you afford in a down payment?
What changes are occurring in the area?

Comparables indicate the following.

1. Whether the property is overpriced.
2. How much to put down for an offer.
3. How many sales have been done in the area.
4. Is the market for that area hot or cool?

Please bear in mind that you should access as many resources as possible in order to get a complete picture of the market. That means talking to as many qualified brokers and doing research on the market.