Knowing house prices is one of the most important aspects of buying a home. If you can’t find affordable homes in your area or underestimate how much homes cost then you could end up living paycheck-to-paycheck in order to keep up your investment.
One of the first steps that come with buying a house is determining what you can afford and where those homes are in your area.
Use these steps to find accurate house prices in your area and to monitor the market for any changes.
#1) Check Multiple Online Resources for House Prices
One of the first things most homebuyers do is look at a few sites for estimates on house prices.
This is a great place to start at the very beginning of the home buying process, when you’re just trying to get a feel for what homes in your area are worth. However, you should never take these prices for actual listings or selling rates. You will find that the prices vary significantly with the more research you do.
Start by comparing the estimates on three or four sites. The estimates will likely be several thousand dollars apart, meaning some houses could be way out of your budget. If you are going to use these sites to estimate the costs of homes, make sure you use multiple to get an accurate average.
Additionally, there are tools out there that provide realistic margins of error for online estimates. For example, a house that is estimated at $400,000 will likely sell for anywhere between $383,00 and $416,000. These small reality checks can help you avoid getting your heart set of a specific neighborhood or area.
#2) Look at What Houses Actually Sell For
As you start to look at home listings, compare what houses are listed for with what they actually sell for.
This gives you an idea for the market and how flexible the listing prices actually are. For example, you might notice that homes sell for about five percent less than their listing price in one particular neighborhood. This will help you gauge what you should actually agree to pay and help you with the negotiating process.
It is important to note that you will want to look at these sell prices within a short window. Markets fluctuate and a flexible neighborhood one quarter can have a significantly higher demand in the next one. Additionally, some homeowners are more flexible than others. You may have to walk away from a house if an owner is not willing to negotiate.
#3) Identify the Status of Homes in the Neighborhood
While you are able to get a ballpark estimate for homes in certain neighborhoods, you need to take into account the location and size of specific homes.
For example, if half of the homes in one neighborhood are on the water, then the cost of those homes will likely be significantly more than homes that aren’t. Similarly, homes with three or four bedrooms and pools will cost more than one-story, two bedroom homes.
Visit the neighborhood and look to see whether the homes you are looking for are the biggest ones offered, or if you would be buying one of the smaller ones. A previously out-of-reach neighborhood might be more affordable than you think if you want a smaller home. Similarly, you might be able to afford a bigger home by looking at other neighborhoods.
#4) Get Industry Insight from a Realtor®
A Realtor® has access to the multiple listing service (MLS), the database of homes that are on the market or that have been on the market with their listing and selling value. You need a real estate license to access the MLS, and your Realtor® should be able to access it and pull any information you need.
While there technically are ways you can access the MLS without a real estate license, these steps aren’t easy. The vast majority of homeowners will simply use the system once they have a Realtor®.
Your Realtor® will also provide value to you outside of the MLS.
They understand home pricing strategies and have their own internal databases in their head based on houses they have listed, sold, and helped buy. Experienced Realtors® can often give a rough estimate for house prices in a neighborhood based on their experience working there and the current market. While this estimate is by no means set in stone, it can be used to gauge the feasibility of moving to a certain area or considering a specific borough.
Find a Realtor® for Your Needs
If you need to gauge accurate house prices in your area to buy a house, find an experienced Realtor® in your area to work with. With Effective Agents, you can input specific criteria that you need and select a few Realtors® who meet those exact specifications.
With our data-driven model, you never have to worry about sorting through dozens of listings and interviewing several potential candidates.
We make the home buying processes easy by matching you with a Realtor® who has specific knowledge about the neighborhood and type of home you want to buy to ensure that you get the best price possible on your dream home.