3 Signs Of An Overpriced House That Potential Buyers Need To Know
Hanna Kielar4-minute read
October 06, 2021
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 looking to buy a new home, it’s important to know how to spot an overpriced house.
Buying an overpriced house is a mistake you want to avoid when purchasing a home. One of the perks of homeownership is building equity in your investment, and 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 homes you’re interested in are listed too high?
Here are a few things you need to know to help you avoid ending up in an overpriced house.
How To Know If A House Is Overpriced
Just because you’ve found your dream home doesn’t mean it’s worth the price the seller is asking. That’s why it’s important to be able to spot the signs of an overpriced house before you make an offer on the home. Here are three telltale signs that you’re looking at a home that’s listed for more than it’s worth.
1. The Home Is Listed Significantly Higher Than A Neighboring Property
Houses in the same neighborhood with comparable floorplans will likely be within the same general price range, so pay attention to neighborhood trend reports and make note of any discrepancies you see. If the house you’re viewing is priced $50,000 more than another one down the street, you’re likely looking at an overpriced home.
To prepare yourself for attending open houses and touring properties, have your buying agent complete a comparative market analysis (CMA). A CMA looks at homes sold within the past 6 months in a specific 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 other homes nearby are selling faster than the home you’re interested in, it could be a sign that the seller is asking too much for their home.
Double-check those comparable homes and their listing prices. It’s likely you’ll find homes in the local real estate market that 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
Your real estate agent should know if there have been other offers made on the home you’re considering, and can help you determine why the home isn’t selling before you make an offer yourself.
If the home has been listed on the market for months and hasn’t received one offer, there’s a good chance it’s overpriced.
Getting no offers, or getting nothing but low offers, is a strong sign that the sellers are asking far more than what the housing market (and other home buyers) think the home is worth.
Bidding On A House That’s Overpriced
Unfortunately, many buyers end up overpaying for their homes but may not know if they’ve paid too much or are simply victims of a competitive seller’s market. Once a buyer overpays for a house, they’re faced with many challenges. They could be stuck with a high mortgage for several years and struggle to build equity as the home price exceeds home value.
So, how do you know if you overpaid for a house? You can look at the property’s value and compare it to others in the area, but it’s best to avoid overpaying in the first place.
Here are a few proven strategies to make bidding on properties and negotiating lower home prices easier.
Work With A Verified Agent
Buyer’s real estate agents or REALTORS® are well-equipped to spot overpriced homes on the market. Working with a Rocket Homes℠ Verified Partner Agent can also add value to your home buying experience with their expertise and personalized recommendations.
Gather The Evidence
Remember when we talked about having your buying agent complete a comparative market analysis? You’re going to need to find that CMA and other documentation to offer as proof of pricing. Home buyers and their agents can use this documentation to better negotiate with the seller and potentially get a lower price on the home.
Learn Why The Seller Is Selling
Knowing the reason a seller is selling their home can potentially help a buyer get a lower price on a home they deem too expensive. Because sellers who need to sell quickly are often more willing to negotiate, you’ll be able to use this to your advantage. Have a conversation with a seller and see why and when they’re moving. If they need to relocate soon, they may be more willing to accept a lower offer.
However, if they’re not in a rush, they may not want to negotiate a lower asking price. Either way, it’s better to find out as soon as you think you’re interested in a property than to regret it later on.
Sharpen Your Negotiation Skills
One of the most effective ways to lower a final home price is by negotiating with the seller and the seller’s agent. While your real estate agent will handle the communications with the seller and the seller’s agent, you’ll still want to learn how to negotiate the best house price when navigating a high list price. If you’re successful, you may be able to convince the seller to accept a lower bid, cover the cost of certain repairs and even cover some of your closing costs.
The Bottom Line: Know The Clues Of Overpriced Homes Before You Buy
The best way to tell if a home is overpriced is to work with a buyer’s agent who specializes in your desired neighborhood. If you’re worried about purchasing an overpriced house, a real estate professional will be able to spot one right away and will know the negotiation strategies to nab it at a lower price.
As you continue in the home buying process, make sure you buy with a real estate agent at your side.
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