Homeowners have a tendency to overprice their homes because their opinion of its true value is clouded with personal memories. Buyers have a lot of choices. If you’re selling your home, it’s important to list it with a fair and competitive price. Just as equally important, buyers need to know how to spot overpriced homes.
How To Spot An Overpriced Home
1. The home has been on the market for a high number of days.
A home is probably overpriced if it has been sitting on the market for a long time. Competitively priced homes bring in multiple offers and sell quickly.
2. Location, location, location.
Location is EVERYTHING. A home is generally worth less if it’s located on a busy street, schools are poorly rated, and/or the neighborhood is filled with older residents. A home is generally worth more if it’s located on the water or has water views, schools are highly rated, and/or the neighborhood is associated with newer homes.
3. A home without updates has less value.
An outdated or unkempt property usually means money will be spent on updates and/or repairs. A home should be priced less if the house was built by a lower-end builder, fixtures are outdated, fence is rotted, paint is older or faded, cabinets are scratched, wallpaper is peeling or outdated, floor plan is awkward, lacks desirable traits (granite countertops, stainless steel appliances, energy efficient, great landscaping), or needs any known repairs.
4. Price is significantly higher than other homes in the same neighborhood.
Just because a home is a luxury estate located in a modest neighborhood doesn’t mean it’s worth more money. A home is only worth what buyers are willing to pay for it. Customized or unique amenities aren’t always clear indicators of the home’s value either. The previous owner may have spent a fortune installing a bowling alley, but that doesn’t mean every buyer wants or is willing to pay more to have one. The best indicator of a home’s value is to look at the listing price of other homes in the neighborhood or look at homes that have recently sold and for how much.
There’s an informative summary of a research project conducted on the value of housing characteristics on realtor.org. Listed below are some of the conclusions that were determined about property characteristics and the effect they have on the value of a home.
- each full bath adds approximately 24 percent to the selling price
- nine foot ceilings add approximately 6 percent to the selling price
- a sitting area in the master bedroom adds approximately 8 percent to the selling price
- each additional bedroom adds approximately 4 percent to the selling price
- the negative effects of age are most noticeable for homes 21-30 years old
- vinyl and aluminum exteriors sell for approximately 4 percent less than those with brick; stucco and wood exteriors sell for approximately 9 percent more
- houses with flat roofs sell for approximately 10 percent less than those with pitched roofs
- contemporary and Dutch styled homes sell for the highest prices
- internal characteristics that add the most value: family room, dining room, whirlpool, and security system
- a fireplace adds approximately 12 percent to the selling price
- a garage adds approximately 13 percent to the selling price
- in-ground pools add approximately 8 percent to the selling price but over-ground pools add no value
- the most valued kitchen features: built-in refrigerator, an island, and a double oven
- the most valued exterior features: sprinkler system, patio, paddock, and tennis courts
- situated within close proximity to a golf course adds approximately 8 percent to the selling price
- homes considered “fixer-uppers” sell for approximately 24 percent less than others
Still unsure if a home is overpriced?
Consult your real estate agent. He/she is familiar with the current market analysis and the value of homes in the area. He/she wants you to be happy with his/her service and should steer you away from overpriced homes.