Buying a house is a huge investment. Families may seriously compromise their household finances if they only make this decision based on their emotions. Sure, the house may check all the boxes on their wish list, but they also need to stick to the low-end of their pre-approved budget so they still have something extra for repairs and finishing. The fact is, unless the property is really new, a pre-owned home is bound to have some problems.
This is why you need to be smart about buying. A house may be overpriced as listed and getting it down to the fair market value may save you an enormous amount.
Here are some of the ways you can spot an overpriced house:
- The house costs far more than the neighbor’s – A cursory search of the average price for homes in the neighborhood should give you an idea of the fair market value. Scour the current listings and go back three months to compute what should be the right offer for the house. Of course, when you do comps you don’t compare apples to oranges. You find houses with similar features to the property you are trying to buy.
- The listing is not drawing any interest – If the listing is gathering dust with very few views, the chances are it might be overpriced, especially if you look at the photos and see nothing wrong at the outset. Some websites offer a way for visitors to determine how many views a particular listing has. Alternatively you may contact the website administrator to ask the reason why the house has been sitting on the market for so long.
- Huge gap in asking price and assessed value – Your agent can procure the assessment value of the houses in the area. This is a good indicator of whether or not the property is overpriced.
- The listing boasts of new amenities – Although this is not a hard and fast rule, there’s a good chance that the owner will try to recoup on all the changes introduced into the property through a high asking price. This should not be the basis to increase the price. In fact, be wary. The furnishings, fixtures and new paint may all just be window dressing to hide a far bigger, structural issue.
- Read the comments online – This is a good way to find out about feedback on the property. It won’t always happen but somebody may comment that the price is too high.
Of course, you can avoid all these concerns if you hire a reputable real estate agent who will guide you through the sometimes confusing world of property buying. A realtor can immediately tell you that the house you are interested in is way overpriced. More importantly, he or she can help convince the owner to cut down the price to the real market value. If you negotiate directly, without knowing all the rules and regulations covering property purchase, you might end up putting all your money into a house with a bloated value.