With housing prices expected to climb again in 2018, it’s important to remember that the real estate market is still a buyer’s market. While a low supply has created fierce competition for home buying, it’s still not impossible to get your dream home at a modest price.
But what is a good deal or a fair price for a home? Price is determined between the buyer, seller, and external market factors, but it’s really about what best suits your needs. Fortunately, there are tools and services available to help you negotiate a better price for your prospective home.
Get a Professional Estimate
There are a number of tools and services online that will provide professional estimates houses on the market based on its geographic location and property size. Redfin offers this service online with prices of comparable homes in the area to provide a better estimate of what your dream home will be initially priced at.
The seller could choose to get an appraiser involved to provide a professional estimate. Ideally, a real estate agent will provide you with a list of homes within your defined price range and provide you with a reasonable offering price on a prospective home.
Benchmarks and Market Analysis
You can always turn to other external market factors to get a baseline of what a home of comparable characteristics would cost in that geographic location. The best benchmark for determining home value is by simply researching what homes in that area are selling for. External market factors, such as foreclosures, the local school district, and downtown area, will influence market value for homes in the area.
A comparative market analysis from your real estate broker will provide a baseline of what fair market value for a prospective home will be. This takes into account what comparable houses of similar size, age, and location in your area are selling for. This is not be confused with an appraisal.
Another benchmark to research is the median home price in your area based on census and the local realtor association data. For example, the median home price for a home in El Paso is $149,300. Use this as a benchmark if you were searching for single family homes for sale in El Paso.
Common Pricing Fallacies
Unfortunately, you might find that your new perspective house is actually more expensive than other comparables in the neighborhood or what the comparative market analysis scored it as. This is because a CMA does not factor the condition of the house, nor improvements made to the house. On this note, the price-per-square-foot will only provide a loose baseline of the home’s actual value. Determining a fair value will depend more on your own evaluations and also the enthusiasm of the seller.
One way to negotiate a better deal with a seller is to have them pay for the costs of any additional fees and closing costs. You can also request the seller pay in part for any maintenance issues or other concerns that depletes the value of the home. These could total thousands of dollars and will not be factored into the market value or initial bid offering.
Sometimes understanding if you got the best deal for a home is not as important as actually making the most competitive bid. In a high demand market, buyers should generally be excited about securing a home that comes within their price range. While there are always better deals on the market, should this factor into purchasing the home you want to raise a family in or settle down in?