7 Ways Homebuyers Can Tell If a Home Is Overpriced
A common refrain in the real estate business is that a home is only worth what someone is willing to pay for it.
For buyers, the challenge is determining whether what you’re willing to pay reflects the home’s true market value. This requires looking for signs that it’s overpriced.
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Here are seven ways homebuyers can tell if a home is overpriced, according to real estate experts.
1. It’s Been on the Market Longer Than Other Homes in the Area
When a home stays on the market even as comparable homes sell quickly, it’s a huge red flag that the home is overpriced, according to Ben Mizes, real estate agent and president of Clever Real Estate.
“If the homes that are comparable are selling in weeks, but this home is selling in months, the likely cause is that it’s overpriced,” he said.
2. It’s Priced Higher Than Comparable Homes
Another warning sign is when a home is listed at a higher price than comparable homes in the area.
Sergio Aguinaga, owner of Michigan Houses For Cash, advises looking for recently sold homes in the same area with similar square footage, size and amenities.
“If they sold for a much lower price, then within a few minutes, you would be able to determine that the listing is potentially overpriced,” Aguinaga said.
3. Similar Listings Offer More Features at the Same Price
Even if a listing price is the same as comparable homes in the area, the home could be overpriced if it has fewer features and amenities, according to Ashley James, co-owner of TrueVision Homes.
“These features could be things such as an updated kitchen, coming fully furnished or more usable lawn space,” James said.
4. Some of the Square Footage Is Undesirable
It’s normal for home prices to be based on square footage – as long as all of the square footage is desirable. If not, then the home could be overpriced, said Jeff Lichtenstein, CEO and broker at Echo Fine Properties.
“An example would be a primary bedroom that is on the second floor [rather than the ground floor] in a [over] 55 community,” he said. “You can apply this to homes that are missing other key features like garage spaces.”
5. The Seller Refuses To Negotiate
Sellers who don’t want to negotiate the listed price often overvalue their homes, according to James.
“The negotiation stage should not feel like a battle between the seller and the buyer,” she said. “When negotiating a house sale, there should always be some leeway. If the inspector or appraiser comes back with any issues and the seller doesn’t want to budge on the price, then they’re basing their decision on personal reasons and not logical ones.”
6. The House Requires Major Upgrades or Repairs
Inspections should give you a good idea of what needs to be repaired or upgraded in a home. When a home requires a lot of work, but is still priced the same or higher than other homes in the area, then it’s probably overpriced.
“If the inspector finds a lot of issues that will need to be fixed, then the buyer will have some negotiation power to lower the price,” Aguinaga said. “You should not be paying for an overpriced home if it has multiple maintenance issues that require repairs or upgrades.
7. The Price Has Been Frequently Reduced
Frequent price reductions often indicate that the seller doesn’t have a realistic idea of the home’s true market value – especially if the price keeps coming down without getting any offers.
“If a home is reduced in price, it is likely that the home was originally priced in an aggressive way,” Mizes said.
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