If a home doesn't sell, there must be something wrong with it, right? True, but maybe not the “something” you suspect. It's not always location or condition.
The number one reason why a home does not sell is price. Homes that are grossly overpriced often never sell at all. Why? Because home buyers don't make offers on them. You should be looking at homes listed over your price range for one simple reason........ The listing price is not always indicative of the market value.
Why Don't Home Buyers Make Offers on Overpriced Listings?
· They don't want to offend the seller. It goes against human nature to offer substantially less than asking price to a seller.
· Buyers erroneously believe that the seller knows the home is overpriced. They believe that if a seller would be willing to sell for less, the seller would simply lower her price. Many times the Realtor has tried to reality check the seller, but it takes a buyer offering market value, sometimes, to drive the truth home.
· Buyers also assume that the seller must have turned down lower offers from other buyers because surely someone, somewhere along the line, had offered a reasonable price to the seller. But many times, there are no offers at all. You’ll never know until you try!
How Do You Find an Overpriced Listing?
The easiest way is to ask your Realtor about the average days on market (DOM) for your area. Multiple listing systems are designed so it's fairly easy to compute the DOM. Then ask your Realtor to sort through the listings and find the homes that have been on the market longer than average.
If your Realtor is local it is likely she has toured these homes and has intimate knowledge of condition and layout of these homes. Ask her to share this information with you. You can also ask your Realtor which of the homes she thinks are overpriced as well. You will be amazed to learn that often agents don't tell listing agents whether their listings are overpriced because agents don't want to offend anyone either! But listing agents aren't infallible. Sometimes they make mistakes when estimating market value prices for a seller. Ultimately, however, remember that it is ALWAYS the seller's responsibility to select the sales price. If a Realtor advises a client on a listing price, it’s still the seller’s responsibility to put the final number on the contract.
Why Would a Seller Lower the Price?
Not every home that is overpriced will ultimately sell for less than listed price, but many homes that are listed at unrealistic prices are owned by sellers who are motivated and who are willing to listen to reasons why they should sell at a reduced price to you. If you find out that a seller has turned down multiple offers for less money, it might mean that it's just a matter of timing. Eventually the light bulb will go on and a seller will say yes.
There are overpriced gems hiding among the inventory of homes for sale every day. Don't just pass them by. You could be passing up an opportunity to buy your dream home.
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