Overpriced home – how to identify them
We get this question a lot when people start house hunting – how do we know if the home is overpriced.
The first answer is simple – your realtor should know the community and should know the comps in the neighbourhood. They will know right away if the price of the home is not what it should be.
However, if that does not put your mind at ease here are a few things you can look for tell if the home you are interested in is overpriced
1) The home price is listed for a lot higher than other homes in that particular area.
Look at current and previous listings as well to understand the neighborhood range. It is also useful to look at recently sold homes in the area.
Although the homes will possibly have different sizes and different lots, you will be able to compare prices.
Remember, you are evaluating the area’s price range. Just because the house you are interested in is larger than a neighboring house, that does not mean it is worth significantly more. There are a few other factors to consider. However, if it is close in range to all other homes, it’s probably priced accurately.
2) The house has been on the market for a long time. Or has been listed multiple times.
Another sign of an overpriced home is how long it has been on the market. This is a fairly simple way to indicate if it is priced accordingly. While some homes may sit on the market due to other reasons, this is usually an indication of overpricing.
Generally, fairly priced homes will sell within a couple of weeks or even just days. Therefore, if this specific home has been on the market for weeks and weeks, then chances are, it is overpriced.
However, it is worth noting that high-end homes usually sit on the market longer due to their price. It is not necessarily because they are overpriced, but because they have fewer buyers in that price range. The luxury homes might be on the market longer. So consider the house type and how long it has been on sale to be able to make a better decision.
3) Renovations are driving up the price
When homeowners upgrade their homes and or add amenities to their house, they will usually ask for a higher price to compensate for the money they spent.
However, the problem here is usually determining what should be upgraded and if people will pay for it? Not all home improvement projects add value to the home and some sellers forget that. They think that because they see value in it, others should too.
If you run into this problem – your realtor will need to negotiate this for you.
4) Sentimental and Emotional Appeals
Home owners sometimes ask for a higher price simply because of the home’s emotional appeal to them. Sometimes selling a home with a lot of memories is hard. It’s not easy to part ways with something you have had for years. If you feel the home price is based on emotions and not on neighbourhood comparables – that is something you will need to talk about with your realtor.
As always, if you need help buying or selling your home feel free to contact Gregg Bamford or Ryan Bamford.