Comparing Sales Pending Transaction
So what kind of information do you need to make the smartest decision about buying your house? The best information is the most recent one. In this case the pending transactions are certainly the most current and are the best indicators of what your house should sell for. Real Estate transactions are different than any other buying you've ever done; it's tricky to figure out exactly what your offer on a dream property should be.
Compare Prices
Consider this: when you look at prices of houses that have sold already you're already looking at information that is old and does not reflect current Real Estate market trends or the actual prices of the property. Things can change drastically in one month - a sale from a week ago is way more reliable and valid in helping you to figure out an offer price than a sale from a couple of months ago.
The only problem with comparing sales according to pending transactions is that there's no record of these sales. The sales record is only available once the transactions and the closing are completed. The information has not yet made it to the public records because the property deed has not been registered.
As a buyer and not a Real Estate professional you also won't be able to find any pending transaction information in the Multiple Listing Service database because once an offer goes through the property is removed from the public record listing.
Prices are not posted until the sale is closed. This is done in order to protect the seller in case the transaction falls through and the property has to be put back on the Real Estate market. If the house comes back to a sale listing the record of what it went for prior to would give potential buyers too much of an advantage because they would know what the seller was willing to accept for the house.
It is possible though that a Realtor will know the sales price - they can find out thorough their business network and professional courtesy - you can try to find out from them about the records of pending transactions to make your own comparison. Some Real Estate brokers will have pending sales transactions posted on a transaction boards in their offices.
Realtors are truly a key part of the Real Estate business, and if you're really ambitious about figuring out the best offer price you may need to go out and establish a relationship with a Realtor to help you get the best information on pending transaction.
There are some sites on the Internet that claim to be able to give you comparable prices, but their information is almost always dated and definitely incomplete compared to what sales' figures one can obtain from their Realtor. You want the best information that you can get, so use your Realtor if that's possible. (Realtors don't have an obligation to help you with pending transaction records. Remember, this would only be done as a courtesy.
It is difficult to find the house that you like and that you can afford... Too often you hear stories about someone giving up their search because they've found something that is good enough. Why do we settle for good enough? We are so specific about people we are attracted to, the food that we like, the type of music we listen to, cars we drive. Why then are we settling down for houses that don't meet our expectations?
Estimate Costs
There are different ways of estimating how a cost of the house is determined. First of all, economical trends and Real Estate market trends influence the price of the property. Real Estate sellers will compare prices of other properties through Multiple Listing Service as well as by looking at previous sales and past trends. And always, the most accurate estimate is by comparing sales on pending transactions.
Possibly because price is often the factor; most people can't exactly afford a Hollywood-style mansion with two swimming pools and a tennis court. However. You should never make compromise your dream just because the house is out of your price range; instead wait till you find that ideal property for the right price, till the pending transactions are comparable to what you are able to afford.
Sure, the swimming pool, tennis court mansion might not be possible but without adjusting your dreams too much buying an ideal house is possible if you know what you're doing. There's no reason to stress or rush if the price ain't right. With your Real Estate agent's help and your own research you should be able to make your choice confidently and calmly.
Deciding On Offer
Once you've found a dream house and are able to afford it, you need to decide what your offer will be. When you put together your price offer you need to take into consideration the following:
· What is the advertised price of the house? This is price is only an estimate; it is not an exact indication of what you should pay for it - different sellers price their houses in different ways. For example, it happens sometimes that a seller will overprice the house hoping that the offer will still end up above what it's worth. On the other hand some sellers will underprice their house as well in the hopes that the buyers will create a fierce competition and overbid.
· What you can pay for your house depends on how much you have in cash deposit and how much you can borrow depending on your income. Once you figure the costs of buying the house you'll need to factor the closing costs that come to about 2% to 5% of the purchase price.
· If you have access to pending transactions see if you can notice a trend - is there an average that would give you some sort of indication as to what the house should cost you?
· Notice if the pending transaction price is in any way similar to sales figures from the past - maybe there's a steady trend. This can also give you an indication as to what's in for the future for your neighborhood. This doesn't happen often as the economy fluctuates unpredictably; however certain trends do tend to emerge. For example, a certain neighborhood in large city in North America was always known for low-income housing projects and the large, ugly mental hospital. Couple of years ago the city proposed building a mental hospital on the outskirts of town and turning the current building into a condo building after upgrading and beautifying it. The proposal went through and since the hospital became a condo dwelling lots of artists moved into the area making the neighborhood much more desirable and cleaner. Yes, it is hard to predict what will happen to a given neighborhood but if you have access to pending transactions you may get a hint out of the figures.
Important Research
The most important research you can do before you decide to make an offer is to look at pending transactions and compare the current sales.
Prior to making an offer to buy the house you should know the prices of houses that are similar to yours - houses that have been sold in the neighborhood that you're interested in, houses that are approximately the same age as yours and houses that have similar extra features.
For the best comparable prices you need to keep these points in mind that the best comparable sale would have occurred within six months. The best comparable sale is the most recent. The Real Estate is a market where prices fluctuate freely and fast; the best comparable sales are based on pending transactions.
The ideal comparable sale would be a pending transaction of a house that is within six to ten blocks of the house you want to purchase - or less, if there's a highway or another line that divides the neighborhood.
Your local Real Estate brokers should have most recent and comparable sales data. The most current and pending transactions are the best indicators of what you should pay for your dream house.
In some areas houses will sell quickly - sometimes for 20% more above the asking price - if there's a bidding war that erupts among frantic Real Estate buyers. Your bet should beat out the competition but keep in mind the pending transactions in the neighborhood - you want your bid to be smart.
Keep in mind that normal (not pending) sales figures are just someone's guess and essentially a bid at what the property costs. A comparable sale - pending or registered - is the only actual sale that shows what a real buyer getting a real loan has paid for the house in a particular neighborhood.
Also, know that there are some neighborhoods that don't have that many comparable prices to look at. For example, if you're looking to buy a house in the country you might want to consider the whole area to check the sales' trends.
When you have a good supply of comparable prices your research and guess at establishing the offer is much easier.
