Property values can vary widely in a community and even within a neighborhood, depending on the exact location of the home. A home located at one end of a street can differ in price from a similar home at the other end. Home prices can also vary widely depending on the condition of the property, the motives of the seller and the state of the local economy, proximity to schools, playgrounds, parks, traffic, etc.
To avoid overpaying for a property, buyers should educate themselves about the local real estate market. Learn as much as you can – attend open houses, compare properties, read local and regional business and real estate publications, talk to realtors. The Internet can also be a big help. Websites, such as zillow.com and trulia.com offer free information about property values. These websites are not foolproof, but they can give you a rough idea of property values in a community and can be a good starting point.
Also, ask the following questions:
- What is the state of the local economy?
- Has a major employer announced it is pulling out of the area? Downsizing? Maybe expanding?
- What is the local unemployment rate? The retail scene? Arts scene?
- What is the reputation of the local schools?
- What is the crime rate?
All of these factors will have an impact on real estate prices. Work with a real estate agent who is knowledgeable and well versed in the local economy and real estate scene. Be sure to take advantage of the agent’s data sources. Research what comparable properties sold for in the last 3 months and how long they were on the market. Find out what the original asking prices were and review current inventory levels with the agent. The number of homes on the market and how long they have been for sale will give you a good idea of supply and demand, and help you formulate a good and fair offer.