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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 area.

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 spend.
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



        

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