Since buying a home is one of the biggest investments, you need to get your hands on the perfect deal. You need to understand how to assess the price of a home to make an informed decision.
This guide will help you develop a solid bargain house-hunting strategy, featuring tips to identify an opportunity in disguise.
Research Recently Sold Properties
You can obtain valuable information by researching how the property you intend to buy is different in price than other houses. Your realtor consultant is the best source of up-to-date information regarding comparable properties.
Moreover, you can assess the comparable properties currently in escrow, which means the property has a buyer, but the purchase process is still incomplete.
Considering Properties on the Market
In this case, consider visiting other homes to understand how their size, condition, and amenities compare with the property you intend to purchase. This will help you compare prices and evaluate what seems fair. Sensible sellers are aware of pricing their properties similar to market comparables to remain competitive.
Evaluating the Unsold Comparables
If the residential property you’re considering has similar value to homes removed from the market, the house may be overpriced because they didn’t sell. Moreover, the prices of similar properties on the market should be lower, especially if they’re vacant.
Evaluate the unsold inventory index to learn about the current supply and demand in the housing market. This index measures the duration required for all the homes currently on the market to be sold.
Understanding the Market Conditions
Check whether prices have been fluctuating recently. In a seller’s market, prices are more likely to be overpriced. Whereas in a buyer’s market, properties are usually underpriced. The property value depends on the market’s condition regarding the real estate boom-and-bust curve.
If the market is improving and not near its peak, properties may not be overpriced even in a seller’s market. On the other hand, if the prices have started to decline, properties can be overpriced even in buyers’ markets. Moreover, consider the impact of mortgage interest rates before making an offer.
Be Cautious of For-Sale-By-Owner Properties (FSBO)
An FSBO property should be sold at a discounted price since there’s no 2.5% to 3% (on average) seller’s agent commission – a factor that many sellers fail to consider when making an offer for a house.
Moreover, the seller may not have used an agent’s assistance before setting a reasonable price, or they may have been unsatisfied with the agent’s advice that they decided to handle it independently. In any of these situations, the property is likely to be overpriced.
At Z Finance Solutions, our professional advisors provide first homebuyers sound property investment advice in Texas and assist with home loans. You can also reach out to us for your home buying down payment assistance and more.
Get in touch with us and get started on purchasing your home.