Goodspeed: What is a fair price for a home?
QUESTION: How can I avoid overpaying for a home? I would like to buy my first home, but after attending an open house, I had no idea if the home was fairly priced or not. How do I know if the asking price is too high, or how much to offer?
ANSWER: Property values can vary widely in a community and even within a neighborhood, depending on the exact location of the home. A home located at one end of a street can differ in price from a similar home at the other end, depending on proximity to schools, playgrounds, parks, traffic, etc. Home prices can also vary widely depending on condition, the motives of the seller and the state of the local economy.
To avoid overpaying, buyers need to educate themselves about the local real estate market. Learn as much as you can – attend open houses, compare properties, read local and regional business and real estate publications, talk to realtors.
The Internet can also be a big help. Websites, such as zillo.com, offer free information about property values. These websites are not foolproof, but they can give you a rough idea of property values in a community. Just remember, they are not gospel, just starting points.
In addition to learning as much as you can about the local real estate scene, you should also learn about the local and state economy. Has a major employer announced it is pulling out? Downsizing? Maybe expanding? What is the local unemployment rate? The retail scene? Arts scene? What is the reputation of the local schools? Crime rate? All of these factors will have an impact on real estate prices.
Work with a real estate agent who is knowledgeable and well versed in the local economy and real estate scene. Take advantage of the agent’s data sources. What have comparable properties sold for during the last three months? How long were they on the market? What were the original asking prices? Review current inventory levels with the agent. The number of homes on the market and how long they have been for sale will give you a good idea of supply and demand.
Linda Goodspeed is a longtime real estate writer and author of In and Out of Darkness. Email her at: firstname.lastname@example.org.