When you are looking at potential properties on the market you will come across all types of homes, from underpriced properties that seem like a great deal to overpriced properties which might have been on the market for a tad bit too long. There are quite a few telltale signs of overpriced properties, such as the amount of time the property has been on the market, the asking price compared to similar properties in the area as well as the lack of buyer interest. In fact, the best way to figure out if a house is overpriced is by opting for a quick and easy online house valuation! If you are in the market looking for a property, here are some ways for you to know if a house is overpriced.
If a property has been on the market for too long
The one way to know that a house is overpriced is if it has been on the market for longer than 3 to 6 months. Usually, a property on the market sells within 3 months, and anything that is on the market longer than that might be overpriced. In such a scenario, the seller might remove the listing from the market or he could relist the property on the market with a lower asking price. Fairly priced homes will sell within weeks, if not days. So if a property has not managed to sell in months, then it might be fair to assume that the asking price is just too high.
If the asking price is higher than that of the neighbourhood
Usually, the way to find out the average selling price of a property is by looking at the selling price of similar properties in the area. Take a look at the data for the last 3 to 6 months and figure out how much similar homes have sold for in the neighbourhood, on average. If the asking price of the property is much higher than the average price of similar properties in the area, then the property is probably overpriced. Always do your research regarding the average neighbourhood selling price before investing in any property!
If there is a lack of buyer interest
If the house seems like it is in great condition but there is no buyer interest in the property, then the chances are that the property is overpriced. Most buyers and estate agents do their research about the average price of property in the area; if the asking price of a house is just too high, most buyers will not even consider making an offer. If you feel that the houses and properties in the neighbourhood have seen a lot of buyer interest but this one property does not have too many takers, chances are that the property might be overpriced.
If there are too many small upgrades and renovations
Many owners try to renovate and upgrade their properties to increase the value of their property. These upgrades could range from kitchen and bathroom remodels to changing the bathroom fixtures or adding vents in the bathrooms. What you need to figure out is whether these upgrades and renovations are required and how much more money are you willing to pay for these changes. Usually, owners end up spending a whole lot of money on multiple upgrades and then hike up the asking price in order to recover their money.
If the seller hired the estate agent who offered the highest valuation
Some sellers choose to go with the estate agent that offers them the highest valuation. While a high selling price might make the seller happy, a potential buyer is only going to pay for the value of the property, not the value quoted by the estate agent. More often than not, a house is overpriced because an estate agent has assured the seller that he or she can get a high price for this property.
If the offers are much lower than the asking price
One way to find out if a house is overpriced is by asking your estate agent what kind of offers the seller has received. If the offers are much lower than the asking price, that is a clear indication that the property is overpriced. After all, most potential buyers will do their research and they might even hire property surveyors to find out the value of the property based on which they will make an offer.