“Actually, high housing prices do not help the economy. They raise the cost of living.” -Michael Hudson
A sound advice when it comes to smart investments according to Warren Buffet has asserted that price is what you pay and value is what you get.
Unfortunately, how much you pay is not always directly proportional to the value you get and this is particularly true in the realm of real estate properties and investments. As a prospective homebuyer, it is your responsibility to thoroughly check a home whether or not it meets a certain standard or criteria in order for it to justify its asking price. When it comes to real estate, price will always remain as the most significant contributing factor as to whether a potential homebuyer would proceed with a sale or not. As a home seller however, your perception of what could have been a fair asking price might be rather skewed. After all, you would always be looking after your own interest–even if that means bloating your price beyond what is reasonable. Moreover, certain aspects such as sentimentality would often cloud your better judgment in coming up a good asking price. In this regard, it is almost always up to the homebuyer to make the shrewd assessment of whether or not they are dealing with an overpriced home–whether that may be a unit in Park Central Towers or a residential area elsewhere.
Here are some of the ways to sniff out an overpriced home:
1.) It is overpriced in comparison to neighboring houses
One excellent way of determining whether a home is overpriced or not is to see how it compares to adjacent homes or the surrounding homes in the area which are similarly on sale. If there are none, look at the previous property listings to have a better understanding of what the neighborhood range is. Admittedly, the properties will all vary in size, but you would still be able to compare the price. Take note: Just because the home is significantly larger than the neighboring house does not always mean it should cost a lot more. There are other factors to consider as well.
2.) It does not match the neighborhood
The asking price should suit the neighborhood and one excellent way of identifying whether it does is to take a gander at the location. Homes placed in premier areas will definitely be priced a lot higher than those in remote ones. If the home is located in a busy district with fewer services, asking price should be lower than homes in well-serviced and sustainable areas.
3.) It has been sitting on the market for a while
Take a look at how long the home has been staying on the market. Although the reason can be attributed to anything other than overpricing, more often than not, it is always an indication that the asking price is not directly proportional to the property in question. Fairly priced homes would sell within a couple of weeks or a month within posting. If a home has been on the market for months or even years, it might be overpriced. It is worthy to note however, that if you are on the market for high-end homes, these would usually stay on the market for quite a while because of their asking price which is justified considering the type of home it is.
4.) It has little to no viewings at all
An excellent way to determine whether a home is fairly priced is its traffic flow. Remember, an overpriced property will always be a deterrent to prospective homebuyers and more often than not, homebuyers would not even bother taking a look at the property. If only a few people are interested in it, take it as a sign that something is wrong. More importantly, if homes in the surrounding area are getting regular viewings and are actually inviting more, then overpricing might be an issue. Always ask your agent prior to making an offer as regards how many times the house has been viewed or bid on.