By Don McCue
Reprinted by Permission
Knowing whether the price is right for a property you’re interested in is vital to avoid problems further down the road.
It can be easy to miss though, especially in a hot market. With stiff competition, an overpriced listing can still get plenty of bids as if nothing is amiss — the downsides of overpaying often come later on, like during the appraisal process or when reselling. Even in a cooling market, sellers are often reluctant to initially lower their price, hoping that their home will be the exception.
Luckily, there are a few easy ways anyone can look out for a potentially overpriced home. Here are 5 signs to look for during your search:
It’s been on the market awhile.
If a home was listed several weeks or months ago, it could mean that something about the property made other buyers avoid offering. If the reason isn’t obvious, asking for your agent’s input or taking a thorough tour are both good ideas.
The price doesn’t compare to neighboring offers.
You can ask your agent to do a comparative market analysis (CMA) on a listing. This will provide an expert check on how the price compares to similar properties in the area.
It has recent (needless) upgrades.
Making essential repairs (like new roofing) before selling is common practice. But not all upgrades add value, and some sellers use low-effort renovations (e.g., new wallpaper) in order to justify a much higher price.
The price per square foot is high.
This number can be especially helpful if there are not many comparable listings nearby. However, keep in mind any valuable property features that might warrant a higher price per square foot.
It has a shifty market history.
Check to see if the home has been bought and sold repeatedly in the past few years. Were there pending sales that fell through? This is easy to research through Zillow, Redfin, Realtor.com, etc. and you can also ask your agent about it.
What has been your experience in the past few months?