Bargain Shopping
Determining the true market value of a property is more difficult in the current market than almost any other time in many, many years.
There are multiple factors including lack of sold comparisons, foreclosures, short sells and desperate owners having to compromise on price. In an active market these types of factors can usually be filtered out.
Many sellers are pricing their homes too high to allow more room to negotiate. Every buyer is a bargain shopper in this market. But, buyers should not be so focused on how large a discount they can achieve over the asking price. Make sure you work with an agent that will complete their homework and give you data to help determine a realistic value. The asking price is often of very limited value in determining a fair price.
Appraisers will consider recent sales and active competition. But, they are more selective than at any time previously regarding criteria to select comps. Appraisers are more conservative than at any time in recent history. Keep in mind a property must appraise to get loan approval.
Allow yourself to recognize (with the help of an agent) that some sellers price their homes reasonably within market value. These properties can be among the best values, without having a huge reduction off the asking price. Right pricing upfront occurs less often in a down market, but it does still happen.