So you’ve found your dream home. The next step is deciding what to offer. This is one of the most stressful parts of the home buying process! Offer too much, and you might end up wasting thousands. Offer too little, and you might get outbid by somebody else willing to pay more.
In this article, we’ll take a look at some of the signs you might be overpaying on a property and the best ways to avoid it.
Is the listing price different from other homes in the area?
Instead of looking at the value of other homes in the neighborhood, buyers should be looking for how much people have actually paid for similar homes most recently.
If a home is significantly higher in price than homes of a similar size in the nearby area, then make sure to find out why.
The home has spent a long time on the market
If a home has spent months on the market, then it usually means it’s overpriced. This might give you some leverage in terms of negotiating power, so it does have its advantages.
The home has hidden maintenance or foundational problems
Even if a home doesn’t have a huge price tag, you still want to make sure you’re getting good value for money. If there are hidden maintenance costs that will end up costing you thousands throughout your ownership, you may want to reconsider or negotiate your offer.
How to avoid overpaying on a property:
Research house prices in the area.
Comparing sold properties in the area will give you the best indication of whether you’re overpaying or not. Try to look at similar types of properties in terms of size, number of bedrooms, and outdoor space. Also take into consideration things like proximity to transport hubs, as this will increase the property value.
Find out as much as you can about the property.
How long has it been on the market for? How much has it sold for previously? Have any previous sales fallen through? The more you know about the history of the property, the better. If the seller has had trouble selling in the past then they are more likely to accept a lower offer.
Negotiate!
Your bank will appoint a valuation company to do an independent valuation of the property’s market value. If the valuation comes in lower than the price you’ve agreed to pay, there may be room for revising down your original offer.
When in doubt, hire a real estate agent.
Struggling to find a home at a good price? Hiring an expert might be the best thing for you in this case. Real estate agents are professional on how to get a good price on a home and will be able to give you the inside scoop on location, properties in the area, market trends, and more.
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