How to Evaluate a Property Price

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The American dream of owning a home is all but lost. Even in today's trying economic times, you can find and purchase a house at a great price that you and your family will enjoy for as long as you wish. The secret is in evaluating the property correctly in order to avoid overpaying or finding yourself locked into a financial burden.

Things You'll Need

  • Computer with Internet access
  • Point your browser to your county property appraiser's website. If you don't know your county appraiser's site, visit the National Association of Counties (NACO.org).

  • Click the "Search Properties" tab on the county appraiser's site. Where to find this tab differs between counties; however, most appraiser sites have a link at the top of the homepage.

  • Type the address of the property you would like to search into the fields provided. This will take you to a page containing information such as the exact square footage, year built, price it was last purchased for, legal lot number and other information.

  • Print a copy of the properties info sheet. You will need this to compare to other properties sold in the area. You can just write the comparable info on the information sheet of the property you are researching.

  • Research properties sold in the area within the last six months. It's imperative to compare apples to apples when evaluating a property's price. The person selling the property could have paid too much or not enough. Compare the prices of houses sold within a 1.5 mile radius, over the last six months, to the property in question. Ensure that the amenities, space, year built and lot size are comparable as well. You can use zillow.com, or better, ask a local real estate agent to supply the information for you.

  • Calculate the cost per square foot of all comparable properties. Simply divide the sale price of the house by the number of square feet.

  • Arrange the cost per square foot figures of the comparable properties into a list from highest to lowest. Cross the highest and lowest figures off your list to get an average. The highest and lowest numbers are the extreme prices of properties purchased in the area.

  • Calculate the average of the remaining properties by adding their costs per square footage together and dividing by the number of properties.

  • Multiply the average cost per square footage for that area by the square footage of the house you are evaluating. You now have the fair market value of the house you plan to purchase.

Tips & Warnings

  • You do not have to do business with a real estate agent to receive information. However, it's customary to compensate an agent if he or she helps you extensively in searching for a property.
  • You can call a local title insurance company and ask for property info sheets of neighborhood properties. They may provide them at no cost, with the hopes that you will purchase insurance from them.

References

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