Many first-time home buyers ask themselves the same question when trying to decide between homes: Am I getting a good deal?
From looking at comparables for recent sale prices and current asking prices in the neighborhood to talking with your realtor about appreciation trends in your area, this video will help you conquer your way to homeownership.
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Video Transcript:
Hi, I’m Amanda with Movoto Real Estate and today I’m going to talk about how to evaluate the price of a house.
It doesn’t matter if it’s a buyer’s market or a seller’s market when you’re looking to buy your first home—one thing all home buyers have in common is that they don’t want to get ripped off.
So today, we’re going to focus on getting a fair deal for the house that you want, and help you figure out if it’s right for you.
Here are some ways that we can evaluate the price of a house:
1. The first section focuses on “comps” or comparables.
You want to research recently sold homes in the immediate area of the house you want. These are called comps—a house that’s in the same neighborhood, of the same general size, and the same condition (not necessarily the same age), and that have the same amenities.
So if you look at my wonderful picture down here… say this is the house you want to buy, next to it’s an apartment, a mansion, a dog house, and another house that looks the same. The latter, and your house, would be comps because they’re similar.
However, there are tricks—the outside of your house could look like it’s a comp to your house, but this one could have a really new kitchen that was just redone and yours could have an old kitchen. So you want to make sure the amenities are similar as well.
2. You don’t have to look at homes that were just sold, you can also look at comps in the area that are still on the market.
This way you can actually visit the other homes and go to open houses and get a feel for what the house is like on the inside compared to the house that you’re currently looking at.
3. Another thing that you can do, is look at homes that were recently on the market but never sold.
If the house that you want to buy is a similar price to one of these homes that were on the market but never sold, that probably means that the house is overpriced.
You might want to see if you can get a different price by negotiating, or just look at a completely different home.
4. In the future, you also want to think about the house that you’re going to buy and what kind of neighborhood it’s in. Is there expected appreciation in the neighborhood you want to buy a house in?
Are there a lot of new constructions going up, like new malls, new stores, a commuter rail, new schools, or new roads?
All of those things are good signs that down the line when you want to sell your house someday, the appreciation value of your home will go up (or at least stay the same instead of going down).
If you’re driving around and seeing a lot of stores that are closing down and general decline of the neighborhood, you might want to look in a different area.
5. Your lender will make you do this no matter what—get an appraisal on your house and get an inspection.
After you get the house inspected, it could come back not exactly like how it looks on the outside. There might be problems with plumbing or big issues with the house that are going to cost you a lot of money.
You can find out if the seller will pay that for you, or if they’ll adjust the offer price. So you can buy the house for a cheaper price, and then you can hire your own person to do the repairs.
6. The final thing you really have to trust your gut with. What is the house worth to you?
If the price feels fair, it probably is fair. If it feels a little expensive, you might want to do some more shopping around. If a house feels pricy to you just because of all of its amenities like a new swimming pool and new rugs… but you don’t really care about these things, it might not be the house for you.
That’s all for today. See you next time, bye!
