The value of a home is the highest amount that all willing and able buyers are willing to pay for a home at a particular point in time. Some of the factors that impact value of a home are location and condition of the home, the amount of inventory available in an area (supply of homes for sale), the amount of demand (buyers) have for similar homes in the same area, economic factors, the availability of financing, etc. As a buyer, you can't control the market, but you can control which home you want to buy, you can control the timing of when you want to buy, and you can control how much you are willing to pay for the home.
If this home has been recently remodeled, I don't think it is really fair to compare it to homes that are in need of a great deal of repair, although the selling prices of those homes are still a data point for you.
I think that it is a good idea to have the worst house on the best street in the best area possible that you can afford as opposed to the best house in a not as desirable location. Location is very important in real estate. I would rather have a below average home on an low traffic dead end side street in a great town with good schools compared to the large remodeled home surrounded by homes in disrepair in a less desirable area.
My advice, is to first make sure you like the house, second look at the recently sold data for homes in the area with around the same number of bedrooms and living area to get a value range, and also compare the asking price with other similar homes currently on the market in the same location. Come up with a figure that you can live with paying and don't pay more than that. If the home is overpriced based on your personal view of the available data, then try to negotiate the price down with the seller or find another home to buy.
Good luck with your home search!
Chris has some real nuggets in his answer.
Look at the link below.
242 homes for sale, 219 homes recently sold.
There is no inventory in your area.
Like most areas suffering from low inventory, the market is actually beginning to go UP. That means offers at asking price for entry level homes will not make it.
I have an entry level home in Tujunga, listed at market price, we had six offers and we will be 5% - 10%R over asking price by the time we are done.
Listen to your Realtor.
Gail Mercedes Cole
The decision to purchase property must be yours to make. You can listen to advice, but the final decision has to be yours.
If you believe it is overpriced, you should take a good look at a CMA of the area. A CMA should show all listed property, all sold property, and all expired property. A CMA is based upon similar homes (bathroom/bedroom/square footage/age/amenities) to the subject property. In this type of market, you cannot look at more then 6 months prior. Listed property will show you asking price, Sold property will show you Market Price and expireds will show you OverPriced listings.
Once you see the statistics, it will be very clear whether or not that particular home is over priced or not.
I can certainly express my opinion regarding a house, state why I think it is a fair (or not) price(based on recent sold comparables), whether it is in an area that is more likely to appreciate(or not), find out the age of the house systems and whether or not it is going to be in need of repair (or not), determine if the house has been updated (or not), but I can never imagine stating to any of my buyers that I want them to buy a particular house.
As an agent, I am the bearer of information. What you chose to do with that information and whether or not you decide you want to buy a house based on that information is a decision that is totally yours to make.
Trying to compare unsold homes is confusing because you don't know what they will ultimately sell for or how much it will cost to bring them up to par with a upgraded home.
No one wants to over pay for a home, but sometimes it makes sense to buy a better home. Sometime a bargain is not a bargain if you have to spend a lot after the fact. I have had clients that had intetions to "fix up" their home and 10 years later they still haven't gotten around to it.
I would take that as smart advice and look for more reasonably prices properties.
You might find that updating another house yourself would be much cheaper than buying this one that someone updated and hopes for a big profit from.
If you feel that you want to write an offer to purchase, write the offer for what you want. The seller will either accept it, turn it down or counter your offer at which point you will be able to negotiate and possible come to an agreement on price. Your agent should show you comps of what has sold then you and your agent should do what Mark pointed out. Compare the property and adjust the price.
Pam Bava, Realtor
Based on recent performance, some short sales that start in July will not close in 2010; there is a premium to be paid for certainty.
I think that if you want to see these houses, then, you should.
It isn't so much about being a "comparable," as it is that fixers have problems that need to be fixed, and should sell for less than a similar home in move-in condition.
I hope this helps,