It’s just common sense that if a home doesn’t sell after a certain period of time there must be something terribly wrong with it. And that may be true. Still just because there’s something that may be keeping it form selling, knowing what that something is can sometimes help the savvy homebuyer get an outstanding buy.
While the first thing most homebuyers think of when a house doesn’t sell is that it’s in a bad location or in bad condition, the No. 1 reason homes don’t sell is simply because they’re priced too high. And homes that are listed too high above their market value might not sell at all, with the biggest reason being that prospective homebuyers didn’t even make offers on them.
One of the biggest reasons homebuyers don’t make offers on overpriced homes is simply that they don’t want to possibly offend sellers. Homebuyers think an offer substantially lower than the asking price may insult the seller and embarrass their selves.
Unfortunately, buyers are assuming the seller knows their home is priced high and also believe that if the seller was willing to sell the home for less, he or she would simply lower the price. Buyers also mistakenly assume that if a home has been on the market for a long period of time that at some point the seller was offered a reasonable amount and rejected the offer. But the simple fact of the matter is that none of those are often true.
Overpriced listings can be a great opportunity for homebuyers and the easiest way to find overpriced listings is simply to ask your Realtor® to search for homes that have the highest number of average days on the market (DOM) in the area. Your Realtor® can then provide you with a printout of those listings.
Chances are your Realtor® may have already toured many of the homes at one point or another and can provide a good deal of insight about their layout and condition as well as the seller’s motivation and other factors key to getting the best deal. Your Realtor® may also know of homes that are overpriced but haven’t been on the market for extended periods of time. Just as buyers don’t want to offend sellers by making low offers, agents don’t want to offend other agents by telling them the homes they’ve listed are overpriced.
Listing agents can make mistakes in valuing a home, however, and if dealt with correctly, their mistake might be your gain.
Take the case of one home that sat on the market for three months with an asking price of $950,000 when it’s market value was closer to $800,000. It was also in an area where the market was softening and there was decreasing demand. On top of that, the sellers had left the area and the house was sitting vacant. Not only was the listing agent not aware the home was overpriced, the sellers were very motivated to get out from under it.
The listing agent was unaware the home was overpriced and the sellers were motivated. Pointing out market conditions to the seller, this couple was able to negotiate purchase of the home for $550,000. Not only was their offer the only one the seller had received, they also offered the owner a large earnest money deposit to assure the seller they were serious buyers.
While not every home that’s overpriced will ultimately sell at a more reasonable price, you never know what price you can purchase a home for if you don’t first make an offer. Even at times when an owner has turned down reasonable offers, it might just be making your offer at the right time when the seller finally realizes they will have to settle for less. So it’s a good idea never to outright reject a home just because it’s overpriced.