The real estate market bubble has burst and home seller and buyers are battling throughout the United States. Home sellers are left with properties they can not sell. Home buyers have more choices and more room to negotiate than ever before. The key to finding just the right home, for just the perfect price, is all in the comparable sales.
Many real estate agents live and breathe by comparable or comp sales. These sales represent the homes in a given area, their total square footage and amenities, and the sales price recently achieved by that home. Other factors taken into consideration when analyzing comp sales are the lot square footage, the age of the home and the extra thrown in during the sale.
For the real estate agent, comp homes will provide guidelines for listing homes from other sellers in the area. If a given area has comp sales of 4 BD homes with 2000 square feet in the $250,000 range, a comparable or similar home would have to be priced in that same price range in order to sell in the area.
Real estate agents are not the only ones who use comp sales to their advantage. Potential home buyers will often study and research comp sales in a given area before looking at the homes available on the market. Then, they will look at the time a home has spent on the marker and thus weed out the sellers who may be in a pinch to sell their home.
Using this information, the buyer can approach the seller with a “deal”. The buyer may choose to offer the seller a price just below the comp sales in the area. No matter how far off the price is from the sellers listing price, the buyer has the upper hand. The financial obligations of keeping a home on the market for extended periods of time are often enough to push the seller into a low balled sale.
Home buyers will need to use a bit of time and careful planning when utilizing the comp sales as a bargaining tool in their real estate purchases, but, when the real estate market is at its lowest, the deals can be life altering. A home that once sold for more than $500,000 may be acquired for as little as $350,000 during a down swing in the real estate market. When the down swing reverses and the real estate bubble expands, the new home owner will have immense amounts of equity in the new home without ever paying an extra dime.
A floundering real estate market is what is called a “buyer's market”. Buyer's have the upper hand and seller are left to either sit on the property, or sell the property for less of a profit than originally intended. Either way, the seller is the one who loses when a real estate bubble deflates. For patient sellers, the bubble will re-inflate and the sale of the home will become profitable again, but this can take years and some sellers just do not have that amount of free time and extra money.
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