4 Easy Ways To Tell if a Property is Overpriced
4 Easy Ways To Tell if a Property is Overpriced.
Given real estate market trends, a question that's becoming more and more common is "how can I tell if a house is overpriced?" and it's a fair one.
As a prospective buyer, one thing you want to be wary of is the danger of overpriced homes. It's a catastrophic error to just match or exceed the asking price and hope for the best.
Even if you have the disposable income to shrug off a high mortgage monthly payment when it comes time to sell the home you can encounter a nasty surprise.
No buyer is ever going to waltz into a home after seeing a for sale sign and make an offer matching the list price but sometimes it becomes complicated to figure out if you're walking into an overpriced home or if the fair market value in your local real estate market is vastly different from your expectations.
For most buyers, determining if a home is overpriced takes a massive amount of time and research - or the help of a real estate agent. But before you scoop up one of those, here are 5 things to consider to determine if a home is overpriced.
Look at the recent sales in the area.
Real estate agents will continuously perform a comparative market analysis for the neighbourhoods they operate in.
Any top real estate agent will be able to tell at a glance if a home is priced correctly or not based on a few factors, most importantly the location.
What is a comparable home though? In the broad strokes, it means a home that is about the same size and in a similar area (if not the same area).
Recently sold homes in the same area of the home you're looking at can reveal a pattern. If similar houses are selling for a lot less than the listing price then you know that something is off.
Without any other supporting information then it's hard to make the call because the house you are looking at could be priced higher because of a great heated indoor pool or a home theatre but if you can't find a good reason in the listing that warrants the discrepancy, then it won't be too much of a leap to say that the home is overpriced.
The seller is not using an agent.
It's human nature to think highly of the home we lived in. Any offer that comes in can seem like a low-ball offer. Many sellers tend to go without a real estate agent because they think that they can save money by removing the agent's commission from the costs.
The truth is more complicated.
For a home, overpriced is a complicated word but for a house it's different. Real estate agents determine a house's selling price based on several objective factors.
Home sellers without an agent are likely to post a higher price because they overestimate the home in current market conditions. A listing agent can help them determine what low ball offers would look like based on an objective home value but in the absence of a real estate agent, there's a good chance the home is overpriced.
If looking into recent comparable sales did not yield any firm guesses, then this is another thing you can take into account to gauge if the home is overpriced.
Home selling is a deeply emotional process for many owners, don't underestimate the impact that this can have.
The state of the home doesn't match that of other comparable homes.
The location could be great, the seller could be using a real estate agent, but the asking price could still not match what the house is worth.
Open houses will give you a great idea of what houses in your budget are like beyond the curb appeal and a few pictures.
While a property might look great on paper there are things all responsible buyers should do when they suspect a home is not priced correctly and that is a walk around the home. You can arrange a private showing if you are very interested to look into the condition of the house.
It's always worth doing a home inspection but if you can spot some critical issues that the seller cannot or will not address before moving forward then you can save yourself a whole lot of time and effort.
If the house was built around the same time as others in the neighbourhood but hasn't been maintained as well, then most agents would try to negotiate to bring the price down to a reasonable level.
It's always a good idea to ask the agent or the homeowners if they are planning or open to doing some repairs before the home is sold. There's nothing wrong with voicing your concerns, especially with a big purchase like a house.
It's been on the market for a long time.
This one should ring the alarm bells.
If a home spends too many days on the market, it's a signal that the prospective buyers need to pay extra attention.
You might think that more days on the market means maximum real estate exposure to more clients for better offers. That's not the case.
A good home, correctly priced and in a good location, will get sold almost immediately. The average DOM, days on market, for a home in Toronto is barely over a week long.
If a property is spending double or triple the average days on market and is still unsold then that could reveal some big issues.
Being overpriced is one of the biggest issues that could leave a house on the market for that long, however, there could be other factors. Difficult sellers or the demand to remove some conditions on incoming offers could also be hampering the sale.
To make one thing clear: a real estate agent is absolutely required to tell you about big issues regarding the home, even if they were hired by the seller. If there's something left unsaid then it would be best to talk to your own agent to figure out the best course of action.
What do you do when you think a home is overpriced?
There are a few things you can do if you think a home is overpriced.
You could offer the seller a lower price, or you could try to negotiate a lower price. If the seller won't lower the price, you could look for another home. Be careful though because low-ball offers can backfire if the sellers are very attached to the home and are not in a hurry to sell.
You could also wait for the seller to lower the price. Some sellers will lower the price if they don't think they will sell the home at the current price. This could be a better option than sending in a low offer or deciding to just bite the bullet and pay top dollar but be aware that this means you will have a lot more competition.
If you can sniff out the reason why the home is overpriced then you could potentially find a way to work with the seller to make things work out in favour of both parties.
A conversation can't hurt but before doing any of those things, the first thing to do is to check in with your agent. They can give you the guidance you need to see if it's worth sticking around or if there are other options available to you.
View All Homes For Sale in Greater Vancouver >>>
About Search Home Listings
SearchHomeListings.ca has simplified the home buying and selling process by giving you superior tools with up-to-the-minute information including active homes for sale, sold homes, market reports, and a home valuation tool! We have a team of success managers on standby to support you with setting up your saved home search and agents ready to take you out on a tour. Tap into our industry experts from inspectors, to contractors to interior designers to provide you with the best prices and service possible. Everyone attached to our website has been rigorously vetted and is made up of caring, knowledgeable professionals that work tirelessly to help you to make your home buying experience as stress-free as possible. Contact us today to see how we can help!
Sites We Follow
Categories
Recent Posts
};