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 What is Fair Market Value?
You are going to have to determine fair price of the home you want before you make an offer for it. This is defined as the highest price a ready, willing, and able buyer will pay and the lowest a ready, willing, and able seller will accept. To be completely accurate, fair market value cannot be established until a property is actually sold. But the trick of an estimate is to come as close to the future for which you could turn around after the closing and sell the house again quickly (approx. 3 months).
You can make your market evaluation by comparing the property you want to buy with similar properties that have been sold in the area during the past year. You will already have a feel for the price from all the house hunting you have been doing.
When you are ready to start negotiating, ask your realty agent to show you comparables. As mentioned in "How a Realty Agent Can Help", comparables refers to the listing of properties that have recently been sold. This information will contain all the pertinent specs on the property, such as the original asking price, all price reductions, the actual selling price, the date of the closing and the date of the original contract. (The dates can help you determine how long the house was on the market.)
After viewing the comparables, make a list of the selling prices of homes that you feel are similar to yours. From here evaluate if the asking price is way above, way below or right on target. If your evaluation shows that the seller is asking a higher price, ask yourself if you've missed something, perhaps it is a better view or larger lot size. If the asking price seems much lower, again ask yourself if you missed something. Consider the lot size, location, time of the market. If everything seems to be agreeable, perhaps the seller is simply looking for a quick sale. If that's the case, move quickly before someone else enters the picture and you end up in a bidding war.
If this article did not answer all of your questions about this topic, please call us and a Knecht representative will be happy to explain all the details and legalities that are involved with selling or buying real estate property.
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