As homeowners, we can often be blinded as to whether or not we’ve overpriced our home. It’s easy to see why we all think our homes should be listed at the highest price: Home is where the heart is. It’s where you’ve shared family dinners and friendly gatherings, where you’ve watched your kids take their first steps and get ready for their first days of school. However, when the tables are turned and you’re shopping the real estate market for available homes for sale as a home buyer, a top priority can be how to spot an overpriced home.
Buying an overpriced home is a mistake you most certainly want to avoid. One of the pains of homeownership is building equity in your investment – buying an overpriced home will make building equity a difficult task. And there’s nothing worse than buyer’s remorse on a home purchase. Not sure if the open houses you’re seeing are listed too high?
Here are three tell-tale signs that any home for sale is overpriced:
1. The Home Is Listed Significantly Higher Than A Neighboring Property
Generally speaking, houses in the same neighborhood, and with a comparable floorplan, will likely be within the same general price range. So take note, if the open house you’re viewing is price $50,000 more than another open house down the street, you’re likely looking at an overpriced home. Before heading out to open houses, make sure your buying agent completes a comparative market analysis. A CMA looks at homes sold within the past 6 months in a given neighborhood to help you better understand your prospective neighborhood’s price point. If the home you’re looking at is priced much higher than others nearby, it might be time to walk away.
2. A Neighboring Home Sold Much Faster
If the home you’re looking at has been sitting on the market for significant amount of time, while other homes nearby are selling faster, it could be a sign that the home is overpriced. Be sure to double check those comparable homes and see what prices they were listed at – it is likely you’ll find homes in the local real estate market are selling for less. Though the house you’re eyeing may be nicer or larger, rarely will there be a significantly large discrepancy in prices from one neighborhood home to another.
3. The Home Has Gotten No Offers
This is the big one, and probably the most obvious. Your realtor should be able to you know if there have been other offers made on the home you’re eyeing. If the home has been listed on the market for months, and yet it hasn’t received one offer, there is a good chance that you are about to purchase an overpriced home. No offers, even relatively low ball offers, is a strong sign that that the sellers are asking far more than what the real estate market (and other home-buyers) think the home is worth.
Work with a Buyer’s Agent
The best way to tell if a home is overpriced is to work with a buyer’s agent who specializes in your neighborhood. They’ll be able to spot an overpriced home right away, and know the ideal negotiation strategies to nab it at a lower price.