The 7.30 report on the ABC recently ran a segment on the pitfalls of purchasing property in the USA. You can view the segment here –
What is interesting is that they pointed out all of the pitfalls, but didn’t really tell you how to avoid them. There are of course a couple of very simple ways to avoid paying too much for a property in the USA or even purchasing in a bad suburb or city.
If you go to www.zillow.com you are able to search on the vast majority of properties in the USA, and in most cases get a price estimate and hopefully a price comparison with the market. This immediately gives you some rough idea of market value, and from what Zillow’s own research says, a figure that is pretty accurate. If you go here you can see how the Zestimate is calculated and how accurate it is for each city.
As a rough guide however Zillow say the following on estimate accuracy:
- within 20% of the actual sales price 74.5 percent of the time
- within 10% of the actual sales price 52.1 percent of the time
- within 5% of the actual sales price 30.0 percent of the time
- for an overall median error rate of 9.4 percent
Here is an example of what Zillow can give you on a specific property for sale – http://www.abc.net.au/7.30/content/2012/s3488301.htm
As you can see you get a very good overview on the property, its expected financial returns and comparative listings. A great start to ensuring you are paying at or close to market value.
Of course there is nothing like a local visit, so I would strongly recommend flying to the relevant City and doing a personal inspection and some general market research.