DETERMINING WHAT THE FAIR MARKET VALUE IS
When you are in the market for a
new home, you must
determine what a fair price is for a particular home you
are looking at before you
make an offer. The fair market
price is the highest price that you are willing to pay,
and the lowest price the seller is willing to accept.
Compare prices of other houses being sold in the area.
You can start making your determination of what the
fair market value of a house is by comparing the property
you are interested in with similar houses that are being
sold in the same area. If you have been house hunting for
some time in the same area, you should already have a
decent idea of what the going price for a house is in that
Check out comparables.
Every real-estate agent will be able to provide you
with comparables. A comparable is a print-out describing
properties that have recently been sold in the area. These
print-outs will have valuable information like original
asking price, all price reductions, actual selling price,
date of closing, and the original listing contract to
determine how long the house was on the market.
Make a list of houses you want and what you want to
Once you have finished doing your homework, you will
know exactly what you want to spend for a house, in a
particular neighborhood. Make a list of some houses that
you like and what you want to spend.
Narrow your decision down a few houses.
If you are having a hard time deciding on what house/s
you would like to make your final decision from,
re-evaluate each property. Go back and look at the
house and the surrounding land. Is it really what you
want? Does it meet your needs? Go visit the neighborhood
again. Is it nice? Is the community quiet or busy? These
are all things that need to be considered prior to making
an offer on a house.
Making an offer.
Most likely, the asking price of the house/s you are
interested in are going to be higher than what your
estimate of what the fair market value is.
Understand that the there is a reason why the asking
prices are so high. To allow room for negotiation! Perhaps
the house owners also did some renovations that increase
the value of their house from others in the area.
Do you want to pay more than what you estimated the fair
market value is? Keep in mind that you estimated the fair
market value and that your calculation may be different
than the sellers, and the realtors. The fair market value
is not concrete until an offer is made by the buyer and
the seller accepts this offer. Please note that there are
questions that need to be asked before you make an offer.
**Never tell the realtor what your top-dollar price is.
The realtor works for the seller and makes more money the
greater the selling price. So, if your maximum price is
$150,000, only tell the realtor that it is $140,000. This
leaves you room for negotiation.
Understanding the Housing Market