All homebuyers have one thing in common: they don't want to get ripped off. It’s important to get the right price regardless of the housing market state. How?
Here's how to evaluate the price of any home, so you could make a sound investment decision.
- Market conditions – Appreciation
- Have prices been going up or down recently? In a seller's market, properties will likely be somewhat overpriced, and in a buyer's market, properties are apt to be underpriced. It all depends on where the market currently sits on the real estate boom-and-bust curve.
- Recently sold properties
- A comparable property is one that’s similar in size, condition, neighborhood, amenities to the one you’re buying.
- Realtor’s Expertise/opinion
- Without even analyzing the data, your real estate agent is likely to have a good gut sense of whether the property is priced appropriately or not, and what a fair price might be.
- Compare properties in the market
- In this case, you can actually visit other homes and get a sense of how their size, condition, and amenities compare to the property you're considering. You can then compare prices and see what seems fair.
- Look at unsold comparables
- If the house you're considering is priced similarly to homes taken off the market because they didn't sell, the house in question may be overpriced. Also, if there are many similar properties on the market, prices should be lower, especially if those properties are vacant.
- Expected Appreciation
- The future prospects for your chosen neighborhood can have an impact on price. The development of new housing can go either way: it can mean that the area is hot and is likely to be in high demand in the future, thus increasing your home's value, or it can result in a surplus of housing, which will lower the value of all the homes in the area.
- Is the price fair?
- If you're not happy with the property, the price will never seem fair, even if you get a bargain. Even if you pay a little over market value for a home you love, you won't really care in the end.
- If you have an offer that seems within striking distance, don’t hesitate to enter negotiations; there are dozens of small changes and strategies you can use to get an offer that maximizes your percentage of original asking price while still making the buyer happy enough to move forward. Even in a seller's market, you can always make an offer below list price, just to see how the seller reacts. Some sellers list properties for the lowest price they're willing to take because they don't want to negotiate, while others list their homes for higher than they expect to earn, because they expect to negotiate downward, or they want to see if someone will make an offer at the higher price.