It’s not always easy to know what to pay when buying a home. There are a number of factors to consider, such as the local real estate market, the owner’s eagerness to sell and your own financial situation.
There is much to be gained financially by buyers who do their homework. This means checking the property values of similar homes in the neighborhood that have recently sold. Drive by the properties you are comparing to, and find out everything you can about them. Online research can only go so far in evaluating a home. Pictures posted online are set-up to put the home in the best possible light, so the best policy is to drive by if you can. Extreme close-ups of a house, for example, may mean that the home has a very small yard, or there is some other eyesore the seller is trying to hide.
Get a little notebook, or make a file on your computer, to keep track of the information you find. Write down what you see for homes that are in disrepair, as well as in tip-top condition. Real estate appraisers collect information from real estate brokers, the county clerk’s office, the tax assessor’s office and even other appraisers. If you don’t want to spend the money on hiring a real estate appraiser yourself, do your own market analysis.
When considering purchasing a home, don’t forget to set a budget for any repair or improvement you plan to make to the property. Acquisition costs, repair costs, the cost of improvements and even insurance all need to be considered as part of the cost of home ownership.
“Numbers don’t lie” when it comes to real estate investing. If you find that the cost to bring a house up to good condition will cause your total investment to be more than the market value of the property, don’t go through with the purchase.
When negotiating to buy the house, avoid falling so in love with the property that you feel you must have it at any cost. There are other houses, other sellers, other properties to be had. Negotiate with your head, not your heart, and you are more likely to come out on the profitable side of the bargain.
The knowledge you have accumulated during your personal market analysis will be helpful during the negotiation process. If the seller is asking a price that is far above market value, point out the reasons why you are making a lower offer. If the seller perceives you to be knowledgeable, reasonable and fair, you stand a much better chance of getting a good deal on the house of your dreams.
