Buying A Home? What Every Prospective Buyer Should Know About Home Prices

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When prospective buyers are searching for homes for sale in their area, they often resort to using the web to take advantage of one or more databases of information relating to real estate. While these databases are an excellent way to be conveniently exposed to a large number of available listings without having to physically visit each one, some information provided by these databases can result in problems relating to the price of some properties. If you are using the web to search for your next home, the following information will offer valuable insight into how homes for sale are priced and how to determine if a home's value is presented accurately for its condition and the market area where it is located. 

Proceed with caution with pricing estimates

Some real estate websites offer pricing estimates to assist home buyers and sellers in determining the potential value of a home or property, sometimes even when the property is even listed for sale. Recently, however, some of these pricing estimates have been found to be inaccurate. In fact, when asked about the actual accuracy of its pricing estimates, one company's representative admitted they were really only a "good starting point".

The problem with many of these estimates results in their dependence upon public data sources, such as tax information and city or county real estate records, instead of actual sold data. In addition, the public information is used to compute an average price estimate based on an entire city or county, with no adjustment for actual property condition, neighbohood or other factors that can positively or negatively affect the value of the home.

Approach tax data carefully

Another common error that prospective home buyers often make when shopping for a home is to use local property tax information as a guide for the actual value of homes for sale that they want to know more about. This is problematic because even though the tax assessor uses an assessment process that has some similarities to an appraisal to assign a value to the home for taxation purposes, this assessment is different than a standard real estate appraisal that is used to determine market value. Tax assessed values are often only a percentage of the fair market value and if there are exceptions, such as those for homestead properties or those owned by combat-wounded veterans, the tax assessed value could be even lower.

In order to get the most accurate home pricing information for any homes or properties, both buyers and sellers should consider speaking with a reputable real estate professional who is knowledgeable about the area where the home or property is located. They will have access to recent listing and sold data, as well as specific information about the neighborhood that could impact the price.