One addition piece of advice. The comps will tell you the approximate value of the property. You want to pay no more than that. You might well want to offer less. A Realtor can help you with that strategy.
Beyond that--one intangible that hasn't really been addressed--is seller motivation. Again, you need to know how much the house is worth based on comps. But then: How motivated is the seller? Low motivation is a seller whose attitude is, "Sure, I'd like to sell if I can get my price. But I don't need to sell and I'm not going to give the house away." High motivation is a seller who really wants to sell--maybe because they've put an offer in on another home contingent on the sale of their current house. Or maybe they've moved and the house is sitting there empty. So, after you know the maximum amount to pay, you can factor in seller motivation to help guide you on how low your offer might be.
Hope that helps.
Don Teppers answer was very good. So much depends on the sellers motivation..
In a balanced market, or a sellers market, the buyers motivation could be even more important.
At $500K I would think that you are shopping as an owner occ. so your envisioned quality of life is an important factor as well as just how good a deal you get, compared to the deals made by competing buyers in your town.
Question: Would you be happier saving a theoretical $10,000 in todays purchase money on a place that suits your needs, but is missing many of your "would like to haves"
-Or happier paying a couple thousand dollars more for the place that is right where you want it to be, and has all the bells and whistles that you personally want, and does not come with some baggage that you'd rather avoid - like some aging appliances or some crummy views.
Rodney Mason, NMLS #151088
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For you that might mean $450000...that might mean $525000...
If you don't have an agent that's counseling you on working at this level in this area then you're walking off a financial cliff. You're going to be in the top value tier, you better have a complete understanding of this submarket, the trends, the shadow inventory, the current inventory and most of all - you better understand what you expect to get of this purchase and why you're considering it. If it's appreciation, you better think that over.
If you don't have an agent and need help - which may mean hearing what you don't want to hear - drop me a line.
The path of negotiation to take, in getting to a mutually satisfactory agreement between you and the seller, is purely based on a strategy that you and your buyer's agent (preferably me) : ) agree upon, in order to put you in the best possible strategic position to achieve your goals. If you would like to see comparable sales and discuss the right strategy for you, I would be happy to help. My contact info available on my website.