What Determines The Price Of A House?
My ¢ .02 to this first time buyer asking for help on Reddit (brave soul asking for advice on reddit):
I don’t own any property and I’m considering buying a home for the first time… I’ve been looking on sites like Trulia and Zillow and just had a question about the prices listed.
In general, do homes sell for more/less/ or about the same as the price listed… if so , is there a rule of thumb ? for example, if a house is listed for 300,000… what would be a good way to find out if that’s a good price, if I should pay more/less, etc.
Also, any good resources for first time home buyers? what should I be doing, and looking at?
Thank you so much for any help in advance.
Good luck on the search! 40,000 foot view first, then I’ll get more detailed.
Denver, CO Source: NASA
First — speak with several local reputable lenders. These are the people who will inevitably tell you your price range which will (1) be a nice dose a reality before you dive into the search and (2) help narrow your search considerably.
Second — write down your wants vs needs: beds/baths, garage, yard, school district, public transit, etc.
Third — speak with several local reputable real estate agents. Having already went through the lender and a basic idea of what your wants vs needs in home will be, this will allow the agent you ultimately choose to do what they do best: Find the house.
Now I’ll get specific and you might gloss over: Real estate data gets input by real estate agents (primarily) into their local multiple listing service (MLS) this data is then either syndicated (realtor.com) or scraped (Zillow et al) and then consumed by you, the customer. The price you are seeing is decided on by the sellers with guidance from a ton of good (appraisals, comparative market analysis) or bad (hear say, one’s own opinion, HGTV) sources. Online estimating tools attempt to do a good job at estimating, but can be incorrect and have garnered a negative image in the industry because of this.
For what price to expect to pay, this has a ton to do with what the local market is doing. Is there a ton of inventory (lots of houses on the market), how long are properties typically sitting on the market, are there adverse conditions affecting the properties, are the sellers downsizing or retiring and require as much from the sale as possible to live on plus their social security, I think you’re getting it.
This is where good vs great real estate professionals really break away, because they will explain all of the nuances to you in real time as you’re going, and understand how they will come to play as you go down the path of home ownership.
First time buyers are a HUGE target audience in the industry, so now that you’re searching for it, you will begin to get bombarded with advertisements and webinars everywhere online — don’t settle for the polish on someones presentation, work with good people that earn your trust. Best of luck!
Source: The opinion of this licensed real estate broker in Denver, CO
What’s the best way to see average inventory levels and average time on the market for a specific area?
Your local Association of Realtors should have monthly statistics, if you arn’t in a major metropolitan area, your local savvy agent should have this.
These are typically throw away stats that are in any marketing material you see, just most people glance past them and look at the big numbers and cool colors.
Original question and response sourced from: