Am I Overpaying for My House?

As of Spring 2022, we’re still very much in a seller’s market. Because demand is so high, and inventory is so low, sellers have a lot of leverage in today’s market. Unfortunately, many buyers find themselves in the dreaded bidding war, and due to this, overpaying for homes is far too common. Overpaying for a home won’t just cost you at the closing table- Keep in mind all of the interest and loan payments you’ll be making over the years. Here are 4 signs you may be overpaying for a house:

Price vs. Comps Mismatch

Your agent should be doing this anyway, but ask them to compare the list price of the home you’re eyeing to the comps (comparable sales) in the area. If your prospective house is out of line with other homes in the neighborhood, it may be worth taking a deeper look into what’s going on. It’s important to focus on closed home prices. Listing prices and under-contract prices don’t paint the full picture. Closed prices will give you an idea of the actual prices paid in your area. Also, keep in mind the special features of the home, as well as the house size and lot size.

Low Online Estimates

Online estimates, you know which ones, are notoriously unreliable, and you should give the most weight to your agent’s comps. BUT, online estimates have gotten more accurate over the years. If an online estimate is significantly lower than the list price for your subject property, this could be a good indicator that you’re overpaying. Keep in mind, however, that these websites can’t account for things such as remodels and home conditions. Check with your agent if you find discrepancies.

Priced Like Expireds

Again, this is where your agent will come in. If the list price is similar to listings that have expired, there may be a reason. Listings can expire for a variety of reasons, but in today’s market, the most common is they’re priced too high.

High Days on Market

Take a look at how long this place has been listed. Ask your agent what the average DOM (days on market) is in your area. Is there a sizeable difference in these numbers? This is pretty market-specific and may vary based on property type and price range, but as a general rule of thumb in today’s market, properties don’t tend to sit. If your subject home has a high DOM, there may be something wrong with it. The simplest answer, and most common reason, is it’s priced too high.

Article Source: Realty Times