How To Know Whether You’re Getting A Fair Price On A Home

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buying a house

Buying a home is an exciting time. However, ensuring you get a fair price can be tricky. You may end up having to negotiate with the seller. Here are some tips to help you get a reasonable price on your house.

1. Research Recently Sold Properties

The first step is to look at comparable houses. Find ones that are similar in size and condition to the one you’re buying. You also want to see what other homes in the neighborhood have gone for. Try to find properties that sold no longer than a year ago.

Consult a real estate agent to find this information. Another option is to look at similar houses currently in escrow, meaning they have a buyer, but the sale isn’t complete.

2.  Check Out Homes Currently on the Market

To get an idea of what other homes are listed for, check out comparable houses currently for sale. Touring these properties gives you a better idea of how they compare to those you’re interested in. When looking at similar homes, consider features, such as the location and number of rooms. Use online resources like Zillow or Trulia to find them.

Keep in mind any feature differences during your comparison. For example, homes with a pool or upgraded appliances can have a higher value.

3.  Take a Look at Unsold Properties

Research unsold homes in your desired area. If the one you’re interested in has a similar cost to other properties not bought, it could be overpriced. If there are more similar homes on the market, the prices should be lower. Check out the unsold inventory index, which measures how long it will take homes on the market to sell.

4.  Understand Market Conditions

Take a look into current trends. Are prices in your desired location going up or down? Another thing to keep in mind is the type of market you’re in. If you’re in a seller’s market, the prices are expected to be higher since there is less supply. However, a buyer market means costs can be lower since more homes are available.

Also, the current pricing of mortgage interest rates can play a role. Property values can fall when rates rise because there is less money available for real estate development. Decreased funds for loans can reduce home values. However, prices can increase with lower mortgage rates.

5. Look Into Future Growth of the Neighborhood

The future development of an area can impact housing expenses. For example, new infrastructure built nearby can increase a home’s value. This can include creating a mall or adding a school. However, store closures usually lower housing costs, and you may want to reconsider the area.

New builds can have either a positive or negative impact. They can show the neighborhood is growing and in demand, but that can increase the supply, lowering the value.

6.  Talk With a Real Estate Agent

Your real estate agent should be able to guide you. They have years of experience in the industry that will come in handy. Look for someone with multiple listings in your area, and ask friends and family for recommendations so you avoid a bad one. Before committing to one, check that their license is up to date. To do this, go to the state’s real estate department website and look up their name.

7. Remember the Appraisal and Inspection

Once a house is under contract, your lender will have an appraisal of the property done. A review is used to determine the fair market value of the home. During the process, an appraiser assesses the interior and exterior of the house and may also research similar properties. If the appraisal comes in significantly less than your offer, you might not be getting a fair deal.

Another essential element during the closing process is a home inspection, when professionals look at the property’s condition. They will examine important features, such as the heating systems and plumbing. If the home needs costly repairs, you may want to ask the seller to lower the price.

8. Consider the Time the Home Has Spent on the Market

If a house has spent a long time on the market, it may be overpriced. One reason it hasn’t sold might be because the seller’s asking price was too aggressive. Sites like Zillow and Trulia can provide information about how much time a listing has been available. Real estate agents are also great sources.

The one advantage to these homes is the seller may be more willing to negotiate. Housing on the market for more than 60 days is likely to sell at a reduced cost.

9. Watch Out for Any Hidden Maintenance Costs

Even if the price is lower, you still want to ensure you’re getting a quality residence. Before buying a house, understand all the associated maintenance costs. For example, repairing the septic tank can cost you $630-$2,892. Completing a home inspection ensures the property’s appliances are functioning.

10.  Take Advantage of Online Tools

Using online tools can give you a rough estimate of a home’s value. It can provide a good starting point as you start to search for properties. Consider combining this approach with the others listed.

Here are some online resources to get you started:

  • Zillow
  • PennyMac
  • Redfin
  • Realtor.com
  • Real Estate ABC

How to Calculate Your Home’s Value

Before looking into other homes, you may want to determine the value of yours. It can give you a better understanding of how houses are evaluated. If you plan to do a renovation, you want to account for the increase in value. Calculate 70% of your home’s renovation budget and add that to the value of your current home.

Use an online tool for an estimate of your house’s current worth. The Federal Housing Financing Agencies pricing index calculator is a useful tool. It tracks a home’s change in value from one sale to the next, estimating fluctuations in the market.

Another option is to get a comparative market analysis done by a real estate agent. The process looks at similar homes that were recently sold.

How to Get a Fair Price

The cost is one of the most significant factors when buying a house and ensuring you get a good deal can be a little stressful. Follow these tips when searching for your dream home to make your search a smooth one.