Perchance to dream ....

To buy or not to buy, that is the question -- and it's a good one, even though the answer calls, as in Hamlet's soliloquy, for some contemplation.

Certainly, it makes financial sense to buy a house instead of renting one.
Moreover, today's low interest rates and the chance of 5% downpayments make it easy to do, even though the challenge of getting value for your money can be difficult.
However, as an Exclusive Buyer Broker (which means I no longer list properties but work solely with buyers), I think you can increase the odds in your favour.

The starting point is to understand the art and science involved in determining a property's value.
The science undoubtedly lies in the asking prices of new homes. They simply reflect the addition of the component costs. These include the lot, the provision of services to it, the materials and labour involved in construction, and an element of profit for the builder/developer. Moreover, the exactness of the sum usually doesn't allow you to pay anything except what can be seen as a "sticker price."

But when you're dealing with the resale market, the art comes into play and offers room to negotiate a price that's quite different from what the vendor thinks it should be.
It begins with what's known as a Comparable Market Analysis. This looks at what else can be bought at the same asking price, what similar homes have recently sold for, and what prices didn't result in a sale. The exercise isn't as precise as costing out a new home, but it does indicate what can be called the "going rate" for a given property.
Affecting the value, too, are the relative condition of comparable properties and, in my view at least, the time and price when the present owner bought the home.
Nevertheless, the end result provides an argument for largely ignoring the asking price and paying what amounts to the true worth of a property that interests you.

In any case, I do consider that you owe yourself the chance of paying no more than you ought -- or need -- to do.
In fact, I think it's nobler to suffer the slings and arrows of a (perhaps outraged) vendor than to meekly concur with a price that's been stuck on a house without a well-reasoned basis to it!

If you'd care to call and discuss any of these points with me, I'll be only too pleased to hear from you. 
Thank you for your time.
 
Duncan Pollock, Real Estate Broker,
427 Gate Street, Niagara-on-the-Lake, Ontario, Canada L0S 1J0
Tel: 905-468-3154 Fax: 905-468-3812 Cellular: 905-704-9037
email: duncanpollock@sympatico.ca
Note: E-mail addressed changed as above on Nov 3 2007
website: http://www.duncanpollock.com