Before you ever make an offer on a house or piece of property you need to know what it is worth to you, what is the market value of that house, the way you determine that is in several steps depending on what your going to do with it. This is important so I am going to restate it. Do not purchase that piece of Real Estate until you know what you are going to do with it! That will determine what that house is worth to you.
If you are purchasing the home to live in then you want it to be worth what homes are selling for in that neighborhood. You don’t want the house to be a $100,000 house if houses in the area sell for $50,000 unless you are only paying $50,000 for it. If you had to sell it quickly it would be extremely difficult as your buyers for that neighborhood only want to pay $50,000 or less for a home. After all would you want to pay more than what the property market value is?
If you are going to rent it, you want the monthly holding costs to be low enough that you have something left over when they are deducted from the rent. And if your going to flip it then you want to make sure your value for the home property purchased leaves you the room to sell it after improvements and holding costs for a reasonable profit.
So how do you determine the real estate property assessment? Well the easiest way is if you have a realtor do a property value search and market analysis of what they think it would be worth if they were to list it and sell it. If you have a realtor they would probably do it for you. Or you can call a realtor who has a house for sale in the area and see if they will give you an idea. If they believe your a perspective buyer that they might be able to get as a client they will usually be glad to assist. If they won’t just call another.
Call on other houses for sale in the neighborhood. Check the local newspaper and call on any that might be comparable. A lot of for sale by owners will not put a sign on the house or in the yard. This is especially true if the house is rented. So the newspaper and thrift ads will be where you will find them. Now go on line to do some more research. You will be able to find additional properties for sale listed by realtors. But that is not the only reason to go on line.
Most county tax authorities have on line databases of tax values, square footage, number of rooms and what the monthly taxes are. Also check to see if they have been paying the taxes and if there are any back taxes owed. You will also be able to see if the values have been going up or down through these sites to give you an idea of what the neighborhood as well as that property have been doing. Some will even tell you how long the current owner has had the home. Some will even tell you what they paid for it when they purchased it. There are also sites on line that will give you there opinion of what the property is worth due to trends in that area and what things are selling for.
When figuring value you also have to look at any repairs that are needed to make it suitable for the purpose you plan on using it for. If your buying to resale there could be a lot of repairs. But if your going to use the property as a rental maybe not so many. Check out “How To Inspect A Property” for help on determining possible repair issues
Now if you have done your homework you now know what you want to offer including terms and price. Of course that still leaves structuring the offer and the terms involved in it. A subject for another article.