5 Signs a Home You Hope To Buy Is Overpriced
Here’s a not-so-fun fact for homebuyers: Real estate prices have been rising by double-digit percentages for 36 straight weeks, currently clocking in at a national median of $449,000.
That’s the bad news, but here’s the good: There are several clear signs that the raging seller’s market we’ve experienced over the past few years has reached its peak and is on the decline—and home prices may soon follow suit.
“Even though asking prices are still climbing, [recent] data shows that more sellers overreached what buyers were willing to pay, and had to reduce their asking price,” says Realtor.com® Chief Economist Danielle Hale
The thing is, many home sellers haven’t gotten the memo yet. Or they have, but are in denial, hanging on to some long-shot hope that their property may still find some buyer willing to pay a sky-high price. Since so many home sellers are clinging to the past, real estate listings are rife with rip-offs these days.
No buyer, of course, wants to overpay for a property. But how can you tell if a listing is overpriced? We’re here to help, by highlighting five red flags that a listing has “rip-off” written all over it—plus how to persuade sellers to graciously let go of that pie-in-the-sky price and meet you in the middle.
1. The house has been on the market for a long time
“Typically, in this market, after three weeks, if there’s not an offer placed, it might be priced too high,” says top Douglas Elliman agent Tracy Tutor.
In an exclusive interview with Realtor.com, the “Million Dollar Listing Los Angeles” star notes that although she’s working in an extremely hot market and at an extremely high price range, most agents agree that if a home is sitting on the market longer than others, a too-high asking price could be the culprit.
Realtor.com research found that nationally, the typical home spent 35 days on the market in July. In the 50 largest U.S. metros, the typical home spent 31 days on the market.
If you’re looking at a home that’s lingered on the market weeks beyond that time, it could be because it’s priced too high—and there may be room for negotiation.
2. The property is priced higher than comps in the area
“Comps,” or comparisons of recent property sales in the area, can easily be found on just about any real estate listing. Ask your agent for the comps, or take a look at the properties that have sold recently and are close to the same size and age as the one you’re considering.
If the price on the home you’re eyeing is much higher than its comps, it could well mean that the seller thinks the house is the fairest in the land. But this is seldom true, says Tania Jhayem of Signature Real Estate Group, Las Vegas.
“Everyone thinks their home is the Taj Mahal, but that attitude often comes at a price,” she says.
Jhayem came across one seller who wouldn’t lower her price because she was holding out for that one buyer who would appreciate her “special” home and would pay her exorbitant list price.
“That usually doesn’t happen, and people like that end up staying on the market with no offers,” she says. In this case, the seller ultimately took a $30,000 hit to finally get rid of the property.
Let that be a lesson to you: If a home is priced higher than the comps in the area, feel free to offer less than the list price. What have you got to lose?
3. The home has been on and off the market several times recently
Most online home listings have a property history section that shows when a home was listed and at what price. It also shows how much the home was sold for and when.
By taking a look at the property history, you may observe a common trick many sellers use: They’ll leave their home on the market for about a month, and if it doesn’t sell, they’ll take it off the market, let it rest for a few weeks, then put it back on the market at a slightly lower price. That way they don’t have to admit to a price reduction.
That also resets the clock, so to speak, and makes the property look new and fresh when it reappears on the multiple listing service. It’s generally a sign that the property hasn’t found its appropriate price point yet.
“Always check the total days on the market,” advises Valerie Fitzgerald, global luxury specialist with Coldwell Banker Realty. “Then ask the agent what is the real story with the property’s total days on market. Why was it on the market, then taken off? Maybe there were personal circumstances, maybe showing it was difficult, or maybe the seller had an [unrealistic] wish price.”
4. Houses around it are selling, but the one you’re considering isn’t
“If the neighbors’ homes have sold quickly but the one you’re looking at hasn’t, then something is wrong,” says Jhayem. “Either the home is overpriced or there’s something not right with the home in the buyers’ eyes.”
Jhayem suggests taking a look at similar houses in the neighborhood that have sold recently, and seeing how long, or how little, they were on the market.
Realtor.com has a handy tool for helping you with this at Realtor.com/soldhomes. Find out whether all the homes in the area are taking longer to sell, or if it’s just the one you’re considering.
5. Many homes in the neighborhood are listed, but few are selling
If a lot of homes in the area are lingering on the market, this may be a sign that they’re all overpriced—and some of the sellers may be willing to negotiate.
Then again, it could be that everyone’s moving out for what they think is a good reason. Perhaps there’s a new shopping center going up nearby that will increase traffic, or maybe zoning laws have changed. Whatever the reason, the current owners might think they need to get out before the first shovel of dirt is ceremoniously
As such, it’s always smart to check what new developments could soon be going up in the area. It’s entirely possible that whatever plans are in the works may not be a bad thing for you—and in that case, you can snag a deal.buyer’s marketbuying a homeoverpricedseller’s marketselling a home