If you aren't enlisting the knowledge of a trained real estate agent when you buy a house, it's important that you know the ins and outs of how sellers settle on a price point for what they are selling. They will often get the help of an appraiser for this, but since prices are always negotiable, it isn't necessarily set in stone.
If you want to make sure you're getting a fair price for a home (and give yourself a good idea of where to start the negotiations), here are some quick and cheap tips for figuring out if your dream home is priced like one, too:
• Research similar homes
Looking at homes built in a similar style, around the same time period, and in a comparable location can give you a good idea of what your prospective home is worth. Granted, the interior is still a big factor in price, but researching previously sold homes that are similar to what you're looking at is a good way of identifying a good starting point for your offer.
• Research the area
Home prices are also affected by the community that they are in, be it a gated neighborhood or just a series of homes along the side of the road. Looking up how a home will appreciate or depreciate in a specific area will give you a good idea of what to expect over the years of owning that home. It's not guaranteed, of course, but it's still a good jumping off point.
• Also, know the market conditions
There are good and bad times to buy a home, depending on the way the market happens to be fluctuating, so make sure you know what is going on before you make an offer. If it looks like a bad time to buy, consider waiting a little longer. If the time has never been better, be prepared to jump at the best price you can get.
• Test the waters by making an offer
You can't say for sure whether or not a seller is interested in negotiating, so a good way of identifying what he or she expects is to simply make an offer below the asking price. Some sellers will draw their asking price as a hard line in the sand to avoid haggling, but other set it as a simple starting line for eventually hashing out an agreeable final number.