I hope you saved your Imperial Observation Post Gil, for I think you may want to buy a bit of armor here, at least. The Hawkeye for Locke is still a great idea if you didn’t get it in Narshe; the Morning Star for Terra if you somehow don’t have a decent sword.
Anyways, that’s really it for now. Head to the house on the northeastern side of town; the small house, not the big one. Inside, speak with the elderly man to learn that his name is Strago; you’ll also meet his grand-daughter, Relm. Watch the scene.
Apparently, Strago, the town "expert", has no idea what the heck an Esper is. Relm suddenly comes in. You’ll leave the house not entirely satisified, but ever more wary.
For some more oddities, go around behind Strago’s house to find what seems to be a casting of Cure; behind the mansion nearby, a kid seems to be using Fire. What the ****!? I thought only Terra (due to being half-Esper) and Celes (due to being Esper-infused) could use magic!
Anyways, head over to the Inn. UNEQUIP SHADOW OF EVERYTHING HE HAS, then go to rest at the Inn for a more generous price than the usual 1,500 Gil.
Later that night, you’re awakened by Strago. Head outside and go east. You’ll end up inside the mansion.