10 Tips for Getting a Fair Price on a Home

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10 Tips for Getting a Fair Price on a Home

All property purchasers share the desire to avoid being taken advantage of. No matter how the property market is doing, it’s crucial to ensure you get a fair deal. But how can you tell before making an offer that you’re receiving a decent bargain, especially in a competitive market? For you to make a wise investment choice, you must be able to assess the price of any house. You may learn how to obtain a great price on a property by using the next ten suggestions.

Key Takeaways

  • It’s crucial to look at recently sold houses, similar homes that are currently on the market and open for viewing, and comparable properties that have been removed off the market because they failed to sell while searching for a home in order to get a feel of the market.
  • Additionally, you should attempt to ascertain if you are in a buyer’s or seller’s market and whether the area is becoming more or less desirable.
  • Make careful to heed the pricing recommendations of your real estate agent.
  • Instead of immediately agreeing to the seller’s asking price, be ready to haggle.

1. Consider Recently Sold Properties

A comparable property is one that is equivalent to the one you’re purchasing in terms of size, condition, neighborhood, and amenities. A freshly renovated, one-story, 1,200 square foot house with an attached garage ought should be priced around the same as a comparable 1,200 square foot property in the same community. However, comparing the price of the property you’re interested in to other homes may also provide you with useful information. Does it cost much less than bigger or fancier properties? Does it cost more than smaller or less appealing homes?

The greatest source of reliable, current information on comparable homes (often referred to as “comps” or “comparables”) is your real estate agent. You may also have a look at similar properties that are in escrow, which indicates that a buyer has been found for the property but that the transaction has not yet been finalized.

2. Check Out Comparable Properties on the Market

In this situation, you may go go to various houses and get a feel for how their size, quality, and facilities compare to the home you’re thinking about. Then you may evaluate pricing to determine what appears reasonable. Sellers that are reasonable understand that in order to be competitive, they must price their homes similarly to market comparables.

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3. Look at Unsold Comparables

The property you’re thinking about may be expensive if its pricing is comparable to houses that were removed off the market because they failed to sell. Prices should also be cheaper if there are several comparable homes on the market, particularly if they are empty.

For information on the current supply and demand in the housing market, check out the unsold inventory index. Given the pace at which houses are now selling, this index aims to calculate how long it will take for all the properties that are currently on the market to be sold.

4. Learn About Market Conditions, Appreciation

Have costs lately increased or decreased? Properties in a seller’s market are probably somewhat overvalued, while those in a buyer’s market are probably underpriced. It all depends on where the market is right now on the boom-and-bust curve for real estate.

Properties could not even be overvalued in a seller’s market if everything are going well and the market is not yet at its peak. On the other hand, if prices have just recently started to fall, houses might still be expensive even in a buyer’s market. Naturally, it might be difficult to recognize the peaks and troughs before they are history. Also take into account how the economy is affected by the employment market and mortgage interest rates.

Be wary of for-sale-by-owner (FSBO) listings since their overly sentimental owners are likely to have them overvalued.

5. Be Wary of for-Sale-by-Owner Properties

When determining how to establish a price for a home, many sellers fail to take into account the fact that a for-sale-by-owner (FSBO) property does not have a seller’s agent’s fee, which is often between 2.5% and 3%. Another issue with FSBOs is that the seller may not have received an agent’s advice in the first place when deciding on a fair asking price, or they could have been so dissatisfied with an agent’s recommendation that they decided to go it alone. Any of these scenarios might indicate that the home is overvalued.

6. Explore the Expected Appreciation

Price may vary depending on the neighborhood’s possibilities for the future. The likelihood of future property appreciation is strong if there are plans for positive development, such as the construction of a large mall, the extension of light rail to the neighborhood, or the relocation of a significant new employer. Even little progress, like plans to expand a road network or construct a new school, might be encouraging.

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However, if grocery shops and petrol stations are shutting, the price of homes should be reduced to reflect that, and you should definitely think twice about relocating there. New dwelling construction may go either way. It might indicate that the neighborhood is popular and will likely have strong demand in the future, enhancing the value of your property, or it could lead to an oversupply of housing, lowering the value of all the properties in the neighborhood.

The Fair Housing Act forbids discrimination on the basis of race, color, national origin, religion, sex, family status, and disability in housing and rental agreements. Report any discrimination you may be experiencing as soon as possible to the U.S. Department of Housing and Urban Development.

7. Ask Your Real Estate Agent

Your real estate agent is probably going to have a solid gut feeling (due to experience) about whether the property is priced adequately or not and what a reasonable offering price may be without even looking at the data.

8. Ask Yourself: Does the Price Feel Fair?

Even if you get a deal, the price will never feel fair if you are unhappy with the property. You won’t really care in the end, even if you spend a bit more than market value for a house you like.

9. Test the Waters

You may always make a lower offer than the asking price in a seller’s market and observe the seller’s response. Some sellers choose not to bargain, so they offer their homes at the lowest price they will accept. Others overprice their properties when they advertise them because they either anticipate negotiating a lower price or want to see if anybody would submit an offer at the higher price. You’ll know that the property was probably not worth what it was advertised for if such a seller accepts your price or counteroffer, and you’ll have a decent chance of negotiating a reasonable bargain.

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Conversely, some sellers may undervalue their homes in an effort to attract a lot of attention and start a bidding battle. The seller may reject any and all bids that fall short of their standards, unlike on eBay where they are only required to sell to the highest bidder.

If you really must have the property, be aware that some sellers may take offense at lowball bids and refuse to deal with you if you decide to utilize that strategy. Additionally, by making a lower offer than the asking price, you run the danger of being outbid by another bidder.

Making a fictitiously cheap offer, or “lowballing,” might backfire if it offends the seller and they decline to do business with you.

10. Get an Appraisal and an Inspection

Once you have a contract, the lender will order an assessment of the property to safeguard its financial interests (often at your cost). If you stop paying your mortgage payments, the lender wants to be sure that it will be able to recover a respectable sum of money when it forecloses on your house. You may not be receiving a fair bargain if the assessment comes in much below your asking price. In fact, unless the seller is prepared to reduce the price, the lender could not even let you to buy the house.

You’ll have another opportunity to evaluate your asking price once you’ve entered into a contract and had the house inspected. You should urge the seller to either perform the costly repairs for you or to lower the purchase price so you may do them yourself if the house requires a lot of work.

The Bottom Line

Understanding housing costs is crucial when looking for a property so you can make a wise investment and negotiate a reasonable price with the seller. You’ll be able to make a confident and educated offer on any house in any market by using these suggestions.

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