real estate

Don't shop for a home on price alone

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Highlights
  • Right now, listing figures on homes can be particularly confusing.
  • The average time buyers look for a home stretched to ten weeks by last year.
  • Keep in mind the more "squishy" factors involved with buying a home.

Today's buyer has a one-track mind when it comes to shopping for a home: price, but it might lead him in the wrong direction.

Home shoppers' overriding goal, according to real estate agents, is to scoop up a bargain.

"There are certain expectations now," says Raylene Lewis, an agent with Century 21 Beal in College Station, Texas. "People think, 'In this economy, I should be able to get X home at Y price.'"

There's nothing wrong with a bargain, except that experts agree that obsessively focusing on price can divert you from other key considerations, like whether a home suits your particular needs.

Here, advice on putting prices in perspective:

Beware the seller's number

William Poundstone, author of the recent book "Priceless," has a radical suggestion: Don't enter a home knowing the list price. Instead, ask an agent to show you properties within your affordability range. Judge the homes on their respective merits, and then ask the agent for help determining a reasonable purchase price.

However, Poundstone acknowledges this approach isn't realistic, saying, "It's hard to disregard the list price."

But, he would like home shoppers to at least be aware that a home price can play tricks on their minds, influencing how they judge the worth of a property.

In his book, Poundstone outlines a study whereby subjects estimated a higher reasonable purchase figure for a home when they were given a higher listing price. Correspondingly, subjects given a lower listing figure on the same property pegged their reasonable bid lower.

Right now, listing figures can be particularly confusing, says John Sullivan, past president of the National Association of Exclusive Buyer Agents.

For one thing, some "vanity" listing numbers are too high, because agents are assuaging sellers' insistence that their home is worth a certain amount, says Sullivan.

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On the other hand, sometimes list prices are realistic, something buyers have a hard time accepting, notes Ellen Klein, of Century 21 Christel Rockaway, N.J. "Buyers today feel that sellers should give their house away," she says.

The takeaway: A higher home price tag doesn't translate into a "better" home. Judge properties on what suits your needs, advises Poundstone. Then, determine a fair purchase figure through a vigorous analysis of the most recent sales and sales contract prices on similar properties in the area.

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