3 Signs to Spot an Overpriced Property.
Written by Wena Roeloffze, REALTOR and Lifestyle Expert. Owner of Realty Club 74, brokered by Coldwell Banker Realty.
Whether you’re a prospective buyer or a seller, understanding the signs of an overpriced house can save you time, money, and frustration. To sell for the most money, you mustn’t overprice it. It sounds counterintuitive that asking for more leads to less, but it’s true in many circumstances. Buyers should exercise caution when considering an overpriced house as it may not provide a good return on investment. On average, overpriced homes stay on the market for 23% longer than homes priced appropriately. Here are some signs to spot if a property is overpriced:
1. Comparison with Similar Listings
When evaluating a home’s price, consider the prices of similar properties in the neighborhood. To do this, we will prepare a comparable market analysis (CMA) in that area for the last 3-6 months (depending on the market) to determine whether the home you are considering are overpriced. We will consider square footage, age, and features of the house you’re interested in with those of nearby homes. If similar houses are listed for significantly less, it’s a red flag that the asking price might be too high.
Sellers, remember that your house has to sell 3 times: firstly by getting an accepted offer, passing the home inspection without repairs and/or closing concessions, and finally with the appraisal. If there is a large discrepancy between your home’s price and other comparable homes, you might be getting that low-ball offer you wanted to avoid in the first place. Our job at Realty Club 74 is NOT to value your home when creating a listing price using a CMA. It is a valuable tool and guide to price your home correctly so that potential buyers will be inclined to make great offers on your home.
Over 85% of all buyers start their home search online and usually in a specific area. The general asking prices are easy to determine, the images can be compared and favorites can be saved. That means that overpriced homes can be spotted and removed from the search criteria.
2. Time on the Market
Pay attention to how long a property has been listed. If a house has been languishing on the market for an extended period, it could be overpriced. Real estate agents can provide this information, or you can find it on various real estate websites. If days on market (DOM) is longer than the average, it could be a sign that the property is overpriced.
While it’s not always 100% accurate, a prolonged listing duration suggests that buyers are hesitant due to the price and the longer a home stays on the market, the more questions arise about the overall condition of the home. While sellers may say that they are in no hurry to sell their homes, our experience at Realty Club 74 is just the opposite. If internet traffic is slow, only a few showings are scheduled and no offers are coming in, anxiety sets in for all sellers. At the same time, investors and buyers are taking this as a sign to either low-ball an offer or lose complete interest.
How long will a home stay on the market? In most real estate markets, a homeowner should receive at least one offer within the first two to three weeks if a home is priced correctly. If you haven’t received an offer after a couple of months, this is a great way to know your home is most likely overpriced. If your local real estate market is currently in the midst of a seller’s market, you should expect an offer on your home within the first couple of days on the market if it’s priced correctly.
3. The Home Expired
Perhaps the most obvious way to know a home is priced wrong occurs when it doesn’t sell and becomes an expired listing after six months. And it’s usually nothing to do with a lack of ready, willing, and able buyers in the market.
Every home has a price tag that is acceptable to a specific home buyer, no matter the condition or uniqueness of it. If a home’s listing price is relatively close to the number a buyer considers fair, it will definitely sell.
Remember, buying a home is a significant investment, so take your time, do thorough research, and consult with professionals. By recognizing these signs, you’ll be better equipped to spot an overpriced home and make informed decisions. Selling your home also requires thorough research. If one real estate agent claims to sell your home for more than all the others or tell you everything you want to hear, you might want to consider how they calculate their numbers, how they reached their findings for your CMA and how they intend to handle price adjustments as part of the listing agreement.
Not all real estate agents are Price Strategy Advisors, like Wena. Her honest and detailed reports might not be the Dollar sign you were hoping for, but it will be a comprehensive and informative guide to provide you with various options.
If you think your home might be overpriced, need another opinion, or is interested to know what the correct listing price for your home could be, fill in your details below and we will get in touch to schedule a free, no-obligation consultation with you.