Sometimes it’s a buyers market, where there’s a lot of inventory on the market, but not too many people looking to buy. Sometimes it’s a sellers market, where there’s not a lot of inventory available, but there are a lot of people looking to buy. Regardless of the current market conditions, a home that is priced correctly will always sell faster, and will usually sell for more, than a house that is overpriced from the beginning. The good news for potential homebuyers is that it isn’t very difficult to spot an overpriced home if you know what to look for, and it’s even easier if you have a buyers agent working for you.
If you are working with a real estate agent, there’s a good chance they will know if a house is overpriced just based on their own experience and their own knowledge of the current market. It’s also very easy for them to do a bit of research to confirm their opinions. A real estate agent can quickly check the recent sales prices of comparable homes in the area. If the home you are looking at is priced higher than all of the available comps, with all other factors being equal, it’s easy to see that that house is overpriced.
Another indicator that a home is overpriced is if a lot of homes in the area are being sold quickly, but the suspected overpriced home has been sitting on the market for a long time. An overpriced home may not get any offers for quite a while. Even if they do get some offers, the seller may not accept those offers because they are holding out for a higher price.
While checking the comps is a quick and easy way of determining whether a home is overpriced, there are some additional factors that you may need to look at. Several of these factors are related to the location of the home. Some houses might appear to be in line with recent comps at first glance, but if one house is located on a busy street and the comps are a few blocks away from the busy street, the house that has a lot of traffic passing by their front door all day long may be overpriced, even if it is listed for the exact same price as nearby homes that don’t sit right on that high-traffic street.
Some other factors related to a home’s location would be the proximity of a home to things like schools, restaurants, shopping, and entertainment. Certain places are just more desirable than others, even if those places are within a few miles of each other. Sometimes, identifying an overpriced home is easy. Other times, you need to take a closer look at a number of different factors. But if you’re careful, or if you’re working with a competent real estate professional, you’ll be able to figure out the right amount to offer on any home you’re interested in.