Are you, as a home buyer, interested in viewing an overpriced home? Or better, will you be paying that obvious over-inflated price? Soooo, why are you then as a home seller convinced you will be able to sell it at those levels? If there’s anything almost guaranteed to make your home sale experience a good or bad one, it will be the price!
In other words, price it correctly from the start and you’ll get offer to purchase activity in no time. However, go with the ‘let’s see if there are buyers willing to pay that price’ and as a home seller, you’ll undoubtedly draw the short straw. Especially if your property is located in an area which is considered a buyer’s market.
But how does a home seller even know he’s dealing with an overpriced home? And more importantly, what will he do once he finds out? You better hope it’ll be adjusting that asking price downward asap!
I have lined up the 10 most popular telltale signs that you’re dealing with an overpriced home below:
Sign #1 – The home is priced well above neighboring properties for sale
“Of course, my home should be selling for more than some of my neighbors’ houses. Have you seen how those look inside?”
Does that sound familiar? It probably does. Do you realize that real estate agents are encountering this type of chatter on a very regular basis?
As a homeowner, basing one’s decision on the asking prices of the currently available properties on the market nearby has some clear pitfalls:
(1) As long as the market hasn’t spoken(i.e. no able & willing buyer and home seller have agreed on a mutually acceptable price), those property asking prices are just that: ASKING, but not given yet! It’s still just an indication of how much those individual home sellers would like to get for their properties.
(2) So, does this mean that your property’s asking price should be in line with those neighboring overpriced home levels? How do you know whether those home sellers are actually genuine sellers and not just sellers who are ‘testing the market?’
I have a personal anecdote to share which might shed some light on this:
Every few years, throughout my childhood, my father would place a couple of his rental properties on the market. Nothing special there!Except that he would price the units 30-40%above the going market rate for similar units in the neighborhood. He would time it such that he’d go onto the market right when there’s little-to-no available stock. Over the decades, he managed to sell quite a few clearly overpriced homes at those levels. And all just because there was someone out there at that time looking to buy in those particular areas, while there wasn’t anything else on the market.
For the record, there were many, many more times, he ended up taking the units off the market after a month or so, as he didn’t even get a single call on them.
Now, how do you know as a new home seller whether the neighbors’ reasons for selling are correct, or trying to do exactly what my father did? Are they genuinely looking to sell or just trying their luck? If it’s the latter, let’s hope you haven’t been lining up your asking price according to theirs! Really!
Sign #2 – The real estate agent who gave the highest valuation was hired
A crucial part of the home selling process is the right selection of a real estate agent. After all, as this person will be the one driving all the marketing efforts of your home, who will be servicing all your home seller’s needs, and who will be in your personal space a lot of times these next few weeks or months, one needs to make sure one deals with a competent, professional individual.
To successfully start the home selling process, it’s important to properly conduct a series of real estate agent interviews prior to making a decision. Taking the time to chat with AT LEAST 3 different real estate agents will give you a very good feeling of who you’re dealing with, and what they can offer to help you. Sure, it might take some time to go through those meetings, but a handful of hours invested in these interviews will really help you get to a great start!
Do you even have an idea how to interview a real estate agent? Have you ever thought about the possible interview questions to ask? Going through this process might seem laborious, but it will without a doubt help in avoiding to pick the real estate agent who came up with the highest valuation figure.
After all, any number put forward by the agents should easily be substantiated by them, no? (I’m immediately thinking of a Comparable Market Analysis report to support their suggested asking price) Plus, you can put things in perspective once you’ve spoken to all three agents and compare their data.
Don’t fall for real estate’s dirty little secret and hire the real estate agent just because they stroked your ego by presenting the highest valuation number, as “your beautiful property is without a doubt the most amazing property on the block!”
Sign #3 – The online property listing isn’t getting any traffic
Although you might still run into the occasional “post and pray” real estate agent, most of them will hopefully bother to make sure that your property listing at least gets exposed online vs. just placing a ‘For Sale’ sign outside your home. With more than 90% of today’s homebuyers starting their home buying search online, it is imperative that your real estate agent knows how to efficiently market a property online, through the numerous property listing portals and mandatory social media exposure.
Having gone through the entire exercise to market the property, it’s really just a matter of hours before the first interested buyers start calling in to enquire about that property. On the other hand, if you can hear the crickets chirp days or weeks after going live with the property listing, there is a serious problem.
I will let you guess what’s turning off all those buyers…
Exactly! Here we are again!
Any real estate agent working the area (who coincidentally gave the homeowner a realistic home valuation, but likely missed out to the agent giving the highest valuation) will know the listing they’re dealing with is one of an overpriced home.
Sign #4 – The home isn’t seeing a steady stream of buyer showings
The homeowners have finally decided to put the property on the market. Needless to say, they are nervous, excited, & uncertain of what will happen during those first few weeks (and months) of marketing.
And rightfully so!
Even though a regular feedback period had been agreed upon during mandate signing, the home sellers are anxiously calling the real estate agent to ask whether he has found them a buyer for their home yet. During buyer viewings or open house events, the home sellers are normally kindly asked to vacate the premises, as it puts the home buyers at ease to talk freely without having to worry that the homeowners are listing in on the conversation around the corner. It’s no real surprise to hear that the same anxious home sellers would be the same people who insist that their ‘household helper’ stay around for ‘security measures’, but who would then proceed to report back all of the buyer movements, comments, feedback, and communication, as it happens.
It’s rather amazing how quickly that type of nervousness and excitement turns into frustration and desperation on the home seller’s side!
“It’s been 2 full days and we haven’t had a single offer! What’s wrong with our house? Will it ever sell?”
Especially when longer periods of time go by and the little bit of interest there was at the onset of the marketing launch has now completely waned. The only ‘stranger’ visiting the house on a weekly basis is the real estate agent, trying to provide a decent service by making sure to have face-to-face conversations on the marketing feedback and buyer (in)activity.
That, and trying to make sure the home sellers remember him, as it might be a while before they see him again at the next buyer showing.
And who knows how many weeks later that might be!
Does this ring a bell?
It’s yet another great telltale sign one might be dealing with an overpriced home.
Sign #5 – The home hasn’t seen a single offer, despite months of marketing
If the marketing portion of the home selling process was efficiently and professionally been taken care of, the first buyer showings should take place within hours or days of going onto the market, and ought to be a non-stop stream of interested homebuyers.
Consequently, once all the serious(‘hot’) buyers have been exposed to this new property, it shouldn’t take long before the first offer to purchase contracts get presented. Depending on the dynamics of the local real estate market you live or operate in, the speed might be slightly different, but as my real estate mentor used to say:
“You’ve got 30 days, 10 viewings, and 1 offer, or something needs to change.”
A correctly-priced property won’t take long to start seeing offers; mostly within days or week from its initial launch. If the home is going through the marketing process and the weeks or months are ticking by without a single offer, you might be dealing with an overpriced home!
Sign #6 – The home has only seen ‘low-ball’ offers
As explained in the point above, an overpriced home is unlikely to see any offer to purchase being presented any time soon. Most home buyers will ask their real estate agent how long the property has been on the market.
Nowadays, every statistic regarding property listings can be found online, so when the “days on market” question arises, time is not on the home seller’s side. Having just heard that this property has been on the market for +100 days, home buyers will start wondering why this property hasn’t sold yet.
Or worse, they start asking what might be wrong with the property!
“With the home seller that long on the market, he might be desperate by now. Let us try to put in a low-ball offer.”
And ‘the rest is history’, as they say.
At least for the home seller’s hope of ever receiving a price anywhere close to his asking price. The market has spoken, and as the home seller of an overpriced home, you might not like what it’s telling you!
Sign #7 – The home has only one common feedback word
The real estate agent will try his utmost to get the word out on this property, and hopefully get potential home buyers interested in viewing this newly-listed property, either through 1-on-1 private showings or open house events. Every single buyer he manages to take through the property will very likely be asked for feedback(or at least, you hope the agent does!); what they loved about the property, liked, disliked etc.
If the property is indeed an overpriced home, almost all visiting buyers are likely to point out how they can buy more house for the same money a little further down the street. As any professional real estate agent ought to do, from the regular feedback (i.e. immediately following the showings) to the home seller will quickly emerge a similar pattern:
“The buyer loved the home and its many features, proximity to schools and shopping facilities, however, the pricing of the property is a big concern, so they won’t be pursuing this house as a potential home.”
The price is wrong.
The curse of the overpriced home has struck again!
How quickly will the home seller adapt to the current market conditions by lowering the price of his overpriced home? Or will this home seller stubbornly remain at the same asking price despite this feedback?
Sign #8 – The home has very peculiar amenities
Every home has its own story, its own history of homeowners over the years. With every new homeowner comes anew set of ideas as to how the house ought to be decorated.
Whereas most people can easily be grouped in a certain number of similar styles, there are sometimes those homeowners who have a particular taste when it comes to home decoration (and that’s putting it mildly).
I’m not talking about those bright yellow painted living rooms or carpeted walls from the 1970’s; I’m referring to those Italian imported pink marble flooring tiles for the expansive master en-suite bathroom, or handcrafted Greek mosaic tiles in the swimming pool, or gold-plated tabs in every single bathroom in the house.
Clearly, a lot of money was spent on those expensive features, yet, unless you’re dealing with an exclusive high-end clientele who might be more open to those features, for the majority of home buyers, most (if not all) of those expensive additions are lost.
And so will its perceived value!
Here you are as the home seller of a home with such peculiar spendy amenities, thinking you can easily get your ‘cost of upgrading’ back by adjusting the asking price. Yet, the market has clearly marked the property as an overpriced home!
Sign #9 – The real estate agent’s 12-month mandate expired and the home is still on the market
After the arduous interviews with real estate agents, the home seller was convinced that this one agent was the person for the job. However, after 10, 11, and now 12 months of marketing, the mandate expired and the house still isn’t sold?!
Perhaps the agent wasn’t such a great pick after all!
Or might there have something else to blame for not selling the property?
I’m afraid to say that after all those months on the market, every home buyer out there will have been exposed to this property, even if the agent’s marketing efforts weren’t up to scratch! Buyers will find your property, especially given so much time has gone by. The problem of trying to sell an overpriced home is back again!
Instead of firing the real estate agent for not getting the property sold, how about adjusting the asking price of this overpriced home down to realistic market-related levels and see how fast it’ll sell then?
Sign #10 – The home’s neighboring properties for sale are actually selling
During the period of the above-mentioned 12-month mandate on this overpriced home, it must have been extremely frustrating for the home seller to see his neighboring properties for sale actually getting sold.
“Why is his home selling and mine, which is much nicer, isn’t getting a single offer?”
With every home offering its own set of features and specific measurements, it becomes even trickier to determine a correct market-related asking price. Once again, it’s imperative to get a number of real estate agents’ opinions, as to where one ought to correctly price a property, in order to avoid lingering on the market for months with an overpriced home instead.
As you’ve read throughout this article, the main reason why most of those overpriced homes didn’t sell was because of price. Although the home seller might be looking to get x-amount out, as it will help finance his next home purchase, or will be looking at x-amount as a Capital Gains Tax, as a real estate agent, one can only assist in marketing and really trying to get the best possible price the market is willing to pay.
Whatever the home seller’s reasons behind the “why it’s priced the way it is,” are unfortunately not really factors the market takes into consideration. Thus, unrealistic price expectations on the home seller’s side tend to be a lot of times at the root of the problem of trying to sell an overpriced home.
In the end, not only will the home seller have ‘suffered’ months and months of marketing, open houses, countless of buyer showings, and a ‘For Sale’ sign outside his house during that time, the chances that it will now sell at a price below the property’s actual value are very high!
Should one as a home seller be overly worried about dealing with an overpriced home?
If you’re a home seller who’s now read this article in its entirety, what should be your next move?
Taken from: https://luxuryhomesjohannesburg.com/real-estate-blog/signs-overpriced-home– written by Xavier DeBuck