Thursday, January 10, 2013

Identifying Over-Priced Homes

Until you become more accustomed to the real estate market in your area of interest, it can be tricky to determine if a home is accurately priced or not. This is especially true when you know you're in a bidding war and need to make the most sensible - yet competitive - offer.

The following is a list of clues which indicate the house you are interested in may be overpriced.

5 Signs of an Overpriced Home
  1. True Love. Sometimes the owners of a home have so much emotional investment, they can't imagine their home only being worth $XXX,000 dollars. Being overly sentimental about a piece of property will cause perfectly logical people to plug their ears and sing La-La-La while their real estate agent attempts to give them sound pricing advice. If you come across one of these, you are best to leave it alone for a while until the owners are forced to concede and lower the price.
  2. The Neighborhood Star. Sure - all of the existing comps in the area come in about $25K less than the home you're looking at, but the owners insist their house is way better than those. What they don't realize is that while upgrades can improve the value of a home to a point - the value will be somewhat regulated by similar houses in the market - even if they don't have granite countertops. Your best bet is to have an idea of what the "Sold" prices are, rather than the "For Sale" prices - these are the true indicators of realistic housing prices.
  3. Playboy Mansionette. You'll know when you're touring a Playboy Mansionette - the master bedroom has a built-in wet bar, the living room has motion sensitive multi-colored lighting which coordinates to the "Now Playing" soundtrack, and the dining room wall has an inset living reef (which can't be moved) worth $XX,000 on the underground tropical fish market. Unfortunately as mentioned above, upgrades only bump home values by so much - and extra-super-custom upgrades don't increase a home's value by much because they're so personal they actually become house selling hazards.
  4. 457 Days and Counting. If you notice a home has been on the market for days, and weeks, and months, and years, it's either way overpriced or is in hideous condition. It may be worth a look just in case but odds are you will want to set your sights elsewhere. This buyer is hoping "just the right buyer" will come along. But if they haven't come along in six-months or more, they aren't coming. Ever.
  5. You're the First! "Wow! It's so great to finally have someone look at the house! It's been on the market for weeks...". If those are the words that greet you at the door, you're about to tour an overpriced home. However, this could work in your favor since an actual offer might be so exciting the sellers might instantaneously accept.
There's nothing wrong with viewing an overpriced home of your dreams, just make sure you take enough time to choose the right house for the right price.

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