Getting a fair deal on a house you love is less of a stroke of luck and more of due diligence. First-time buyers should do their homework before launching into a real estate transaction. Here’s how:
Check comparable listings
Visit multiple properties with similar amenities, room size, square feet, and other features and investigate the difference in listing prices. Square feet matter the most and you should consider properties falling within 10% of your property. You can start by using online tools to estimate the value of the property. However, it’s best to manually compare the actual property prices by physically inspecting them and talking to the seller. If an asking price seems suspiciously lower or higher than the average rate, something could be amiss.
Investigate comparable sold and unsold listings
Check the average sale price for properties sold in the last three months. Also, evaluate properties preferably across from each other or in a close radius, and which are of the same age and condition. It’s also necessary to compare the asking or listing price against the actual sold prices to get an idea of how much wiggle room you have during negotiations. Real estates prepare a document called Comparative Market Analysis which is a fair way to understand the current prices. Pragmatic sellers know not to overprice the property unnecessarily to stay competitive in the market. If the house has been on the market for too long, it could be because of overpricing. So it’s important to ask how long the owner has been trying to sell it.
For reasons unknown
If the house seems underpriced, it could be because the owner is either in a hurry to sell it off for personal reasons or because the house has some structural or foundational problem that could later turn into an expensive affair. You should get a thorough inspection if you suspect the latter.
Market considerations
The market value of a house is a starting point for a negotiation based on CMA and property features and location. However, the appraisal value is done by a licensed third-party professional. Based on the inputs you have, get an appraisal value of the house. But don’t just go by online calculators.
It would be wise to also consider the assessed value of a home which is the monetary value set for taxation. The assessed value is usually lower than the market value, however, evaluators may use the assessment rate to correctly estimate the value. If you find that assessed and appraised values are abnormally less than the asking price, you must ask the seller to justify the excessive overpricing. Usually, it may be priced higher for negotiation purposes, but if you’re not aware of the correct market value, you’d be getting yourself into a deal that puts you at a disadvantage.
Get help from a professional appraiser or property valuer, plenty of which are available in the real estate market. If you find after an appraisal that some components in the appraisal report should not be overpriced as per the asking price, you should confidently negotiate. Some of these factors are curb appeal, valuation of similar properties, amenities, and home improvements. Any reasonable buyer will price their home fairly knowing that the assessment and appraisal will be a countermeasure that buyers could use.
Gathering data from various sources
Don’t just take the seller’s word as final, no matter how many different homes you visit or how convincing or unshakeable each seller seems. You can start by using different online property valuation tools to get an initial idea. Another way is to check online property portals to compare similar properties in an area. You can also download National Housing Bank Residex data for a particular city to get the housing price index. Contact several different real estate agents to understand the pricing differences and micro trends for the neighborhood. Use your own sphere of influence to get the numbers on actual sale prices of past sales or similar sales.
Convenience matters
Sometimes the sellers may agree with the general market value of the property but may price it higher due to facilities provided such as luxurious fixtures, appliances, fully equipped modular kitchen, air conditioning, etc. In such cases, it’s better to get such components appraised and assets checked for quality so that there’s no overcharging.
At times, if the seller already knows that the house is convenient practically or a dream house for you, they might overprice and lure you into a high bidding war. Some may overprice a home simply because of the property’s prime location, but the home itself may not be worth the ask in terms of assets and amenities. In such cases, you’d have to be discerning about your priorities and be firm during negotiations. As such, it’s a good approach to not let the seller sense just how badly you want the house, so that he may not manipulate you into paying higher than the worth.
While broaching the subject of convenience, it’s a good practice to inquire if the housing society has an intelligent digital management app like MyGate. It automates security by passcode-based entry/exit, enables multiple types of digital maintenance payments, and facilitates end-to-end management of society matters on one single app.
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