This is one area that having an experienced and competent agent is vital.  There are some basic misconceptions by some buyers that I hope to clear up here.
MISCONCEPTION-The price set on the house is close to what the house is worth.
FACT-Prices range from 5% below market value to about 20% above market value.  The predominant range is market value to 7% above market value.  The variation is due to either the agent not knowing the value or the seller not being willing to sell the house at value.  I have documented this variation.  Few agents really know how to properly set value on a home.
MISCONCEPTION-The appraisal will protect the buyer from paying too much.
FACT-The purpose of the appraisal is to protect the lender, not the buyer.  The great proportion of appraisers that I have met are not competent to arrive at a value within 3%.  Most often, they start off with a price (the sales price) and adjust the comparables to meet that price.  An appraiser I have been impressed with is Greg Creech 206-246-7730.
MISCONCEPTION-If a buyer is able to get the seller to reduce the price by a particular amount, the buyer did well.
FACT-Due to the above facts, the house may be already priced somewhat below market, in which case a full price offer would be a good value.  It also could be priced above market so even the price offered is above market value.  Note the below example.  Both houses are valued at $255,000.  One seller is asking $250,000 and the other is asking $270,000.  A buyer could pay full price on one and get a good value and get almost 4% off of the other one and still be paying too much.  The solution is to look at enough houses so you get an idea of value and to work with an experienced and competent agent.
Asking Price $250,000 $270,000
Value $255,000 $255,000
Accepted Offer $250,000 $260,000
Extra Value for Buyer $5,000 -$5,000
     The most helpful method for you to know the value is to look at several comparable properties.  Try to make some mental adjustments between them.  If you are working with a competent experienced agent, your agent can help by doing a basic market analysis on the house you are buying.

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