When you find a home you’d like to buy, how can you make sure you’re not going to pay too much? Well, there are several steps in ensuring a sound investment. First, talk to your realtor. She can pull up the values of homes comparable to the one you’d like to buy. Then take the price of all the similar homes in the neighborhood which have sold recently. Compute the sale price per square foot. Do the same on the home you like and see how it stacks up. If the price per square foot on your home is a lot higher than the other homes for no good reason, you’ll probably be paying too much. Next, have the home inspected. Although the seller must disclose any known problems, he may be unaware of significant and expensive defects like foundation cracks, termite infestation, or wiring problems. 

It’ll pay to spend $150 or so on an inspection to uncover trouble spots before you buy. Once you’re serious about a house, the lender will require an appraisal. You’ll pay a trained professional about $325 to compute the market value of your home. This not only eases the lender’s fears about his investment in your mortgage, but it also gives you peace of mind about your investment in your future.