Become the historian of housing values in your small, specific investment area. For each property in your investment area, you will want to record the original asking price and the final sale price. What was your initial reaction to the original asking price? You are now the appraiser. Do you feel that the asking price and sale prices were high, low or average? In your opinion, did the new buyer pay too much? Was it a good deal or an average deal? Most properties sell in 120 days. How long did this property stay on the market? Were you able to glean any special information, such as the size of the down payment or the name of the lender?
Venture outside your small, specific investment area at your peril. Why? If you aren’t finding the deals in your small specific investment area, be patient and look harder.
As you go through this fairly simple recording and self-questioning process with each new property on the market, your understanding of values will deepen. At first, you may have few opinions. Later, you will be readily able to differentiate the good buys from the bad deals.
When most residential buyers make offers on property, they are thinking about more than money. They are going to live in the house. They have to like the kitchen and the neighborhood and the schools and local government. Your personal housing preferences are not particularly relevant. You aren’t going to live in the house. When you make offers, you only have to like the price.