Successful Home Ownership IV – Do Your Market Research
by Evan Vanderwey on 22/06/10 at 7:25 am
The Case Shiller Index gives a national and regional home prices overview, and indications are that now is an excellent time to buy a home. That does not mean that someone can’t pay too much for a home in today’s market.
When you’ve decided about the area in which you would like to live, set up a meeting with a full-time Realtor, preferably contracting with a Buyer’s Agent, one that you were referred to or already know and trust.
When you’re looking at a particular home, make sure you obtain ALL listed and sold homes in the area surrounding that home. The listings should all be active listings, and the sold homes should be from the last 6 months if there are any. Going back a little further can be helpful to give a little bit of perspective to the price – the farther back in time the sale closed, generally speaking, the higher the sold price will be (as of the date of this writing).
You also need to know what the Assessed Value of the home is as well as the Taxable Value of the home. In Michigan, these figures can be accessed for the past three or four years. Get them all. There’s no iron clad rule of thumb about the current taxable value of the home as it relates to the amount you should offer, but you want to know in general where you stand compared to what the seller may have paid for the home and how long they may have owned it. Go over these details with your Buyers Agent; he or she will explain the values here and what you are looking for.
Lastly, if the home is bank owned, you’ll need to know if the tax rate is inflated for the first year. This has the potential of adding thousands to the closing settlement amount, so it ought to be considered in the offer price and terms.
When you have all of the above information, you can begin to formulate a price. It’s likely that your agent will not be able to “give you a number” based on their code of conduct as Realtors, but they can give you great advice, so do ask lots of questions along the way.
