Top 6 Tips on How to Avoid Buying Overpriced Homes
Even in this fast-paced market, there are some homes that just don’t sell. Unfortunately, the number one reason why an attractive home does not sell is because the price does not properly reflect the investment. In fact, overpriced homes often don’t sell at all, even after their price has been reduced. In today's increasingly competitive housing market you’ll want to be sure that you still get what you want for the price you’re paying.
Check the Comparables
Avoid buying overpriced homes by checking the “comparables”. A comparable property is one that is similar in size, condition, neighborhood and amenities. A 1,200 sq.ft., 1-story home should be listed at roughly the same price as a similar 1,200 sq.ft. home in the same neighborhood.
Is the property you’re looking at considerably less expensive than larger or nicer properties? Is it more expensive than smaller or less attractive properties? Being able to make these comparisons can help you to recognize signs of over pricing. Agents at DSEAYCOM are the best source of accurate, up-to-date information on comparable properties.
You can also visit other similar homes on the market and get a true sense of how their size, condition and amenities compare to the property you're considering buying. Then you can compare prices and see what seems fair.
Check the Property market time
To avoid buying overpriced homes, another factor to check is the DOM or days on market, which tells you how long the house has been for sale for. Generally, when a property is sold right away, it means that its price was reasonable. If the property sits too long and it still has a price higher than what you expected, then it’s overpriced. A property stuck in the market for a long time means other buyers is also hesitant to buy it, probably because of its unreasonable amount.
Check the Location
The location of the property is also an identifier when you want to avoid buying overpriced homes. If you’re looking for homes in glamorous locations expect the property to be pricey. However, if the property is situated on a less glamorous locale and still going for a high price, then it may be overpriced.
Before submitting any offers, be sure to ask around the neighborhood first. If neighbors don’t mind, ask how much their property is worth or what they would put their property up for. Remember that the value of a home is partially dependent on its location; if it’s higher than other properties, then it’s time for you to reconsider buying.
Check the Expected Appreciation for the Area
The future prospects for your chosen neighborhood can have an impact on price. If positive development is planned, such as a major mall being built or a large new company moving to the area, the prospects of future home appreciation looks good. Even small developments like plans to add more roads or build a new school can be a good sign. On the other hand, if grocery stores and gas stations are closing down, the home price should be lower to reflect that, and you might reconsider moving to that area.
The development of new housing can go either way - it can mean that the area is hot and is likely to be in high demand in the future, increasing your home's value, or it can result in a surplus of housing, which will lower the value of all the homes in the area. Your trusted real estate agent should be able to inform you of these projections.
Ask For Your Real Estate Agent's Opinion
If your Realtor is a neighborhood specialist, it is likely she/he had toured these homes and has intimate knowledge of the condition and layout of these homes.
To make sure you avoid buying overpriced homes, you can ask your Realtor which of the homes they think are overpriced. Without even analyzing the data, your real estate agent is likely to have a good gut sense of whether the property is priced appropriately or not and what a fair offering price might be.
Check on the interior of the house; repairs and renovations
There are many properties that have undergone a lot of renovations and repairs. When the homeowner is trying to get all of the money he/she has spent on these renovations, the home you’re trying to buy might be overpriced because the homeowner is putting all of the renovation costs into the price. To avoid buying overpriced homes in this kind of situation, ask about the renovations and try to figure out if these renovations did add value to the property so you can negotiate on how much the final price should be.
A home inspection, which is completed after you're under contract, will also give you a way to gauge your offering price. If the home needs many expensive repairs, you'll want to ask the seller to make the repairs for you or discount the purchase price so you can make them yourself.
There are overpriced gems hiding among the inventory of homes for sale every day. What you can do to avoid buying overpriced homes is to look for honest agents and affordable properties in the right places. There are many reliable online portals out there who have lists of properties at competitive prices and agents who know what’s best. It's also important to understand how homes are priced so you can make a sound investment and reach a fair agreement with the seller.
Also read: Top 6 Home Buyer Mistakes
At DSEAYCOM, we’re happy to answer any questions you have about buying and selling in the Alabama area. Call us now or feel free to share our contact information with someone you know that needs expert help buying or selling their home.
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