It is tempting to pay more for a home that you really like, and it happens all the time even in a down market. Still, you want to make sure that the price of the home makes sense for your situation and the context of your home purchase.
The immediate question of how much to pay arises when you have made a choice. Remember it is your choice, not the standard, which influences you to pay more. You need criteria to screen your list of desirable homes and to assess their prices.
You will probably find some overpriced homes that meet all your criteria, but you are not considering them for purchase. In any case, the immediate assessment of price comes from a market analysis of other home prices in the area. The market value of your chosen home can be estimated by finding the price per square foot of that home and comparing it to the average price per square foot of similar homes. Brokers and appraisers also provide professional valuation, but we can at least use this one criterion when coming up with a good price to offer. The following is a general and very brief guideline for what you should do when considering a what price to offer on home.
- Calculate per square foot average price
- Assess the effect of business activity
- Assess the effect of zoning laws
- Obtain a second opinion
- Negotiate a price