Is This House Overpriced?
Overpriced home prices are so last year. Like every trend, though, you can easily find a handful still hanging out on the market — but only if you know what to look for. Gosh, we all love a good win when we get our clients a great deal!
Let me show you how I spot inflated home prices for my buyers so that you can feel great about the house you’re getting and the price you’re paying. I had a HUGE win for a client this month checking allllll the boxes below! Here's my process 👇🏼:
1) Get cozy with a Comparative Market Analysis (CMA).
A CMA is THE best way to determine a house's fair market value. Put together by a knowledgeable REALTOR®, it’ll compare recent sales of similar properties nearby to paint a picture of what homes are currently selling for. Keyword here? Currently.
2) Check the time on the market.
A property that’s been sitting on the market for a while may indicate an inflated price. Well-priced ones attract interest — and sell — quickly. (FYI: the average days on market in June 2023 was 44.)
3) Appraisal vs. listing price.
You’ll be well into the buying process before the appraisal comes back, but it’s critical in confirming a property's value. If the appraisal comes in lower than the listed price, it's a serious red flag. If it comes in lower than your accepted purchase price a few different scenarios may play out. Best case scenario on the buy side? Buyer gets the home for the appraised value. Worst case scenario? The seller decides to go back to market. If the home has been "sitting on market" the chances of this happening are unlikely, but never rule it out.
4) It’s what’s on the inside that counts.
Does the home boast a shiny, new kitchen, or is it stuck in the 90s? Or better yet, the 70's? 😉 Interior and exterior upgrades can add or subtract from a home’s value. If things don’t add up, it’s time to ask some questions. On another note, it is VITAL to ask these questions with empathy and compassion. While you may not dig their vibe, the homeowners may have a heavy emotional connection to their home and it's current condition - words hurt. Always be kind - you get more bees with hunny.
5) There’s no crying in pricing (or, at least, there shouldn't be).
Sometimes, sellers get attached to their homes, leading to “emotional pricing” - pricing based on data AND sentimental value. Have compassion, but negotiate with your CMA in hand to avoid paying more than you should. Data is data, and it should be your bestie.
An experienced REALTOR® who has been diving head first in THIS MARKET for the past few years is going to be your best defense against spending more than you should — it's been the wild, wild west out here and language is key! Offers aren't "just" offers anymore. "Home to be presented in broom swept condition" is a term of the past, a REALTOR® who is truly dedicated to your best interests will have a complex strategy in place to ensure that your offer terms rise above the rest!
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Source: June 2023 Housing Market Trends Report - Realtor.com Research