Moving into a new home is one of the most thrilling experiences a person can have. Buying one, not so much. Even home sales that go quickly and easily are never truly quick and easy. First, there are the weeks or months of perusing, comparing, taking notes, checking out properties and going to open houses. Then there’s the joy of applying for loans, getting preapproved and having underwriters comb through your finances, income, taxes, debt and payment history. Then, of course, there’s the really fun part of shelling out cash for things like inspections and appraisals along the way.
Ideally, your efforts pay off in the end when you turn a key in the lock of your perfect new home. No home, however, is perfect if you pay too much, which about 1 in 3 American homebuyers do, according to a Harvard University study. Here are the signs you need to recognize to avoid falling into an overpaying trap.
Your Agent Is Just OK
A home is the biggest purchase most Americans will ever make. Having a great agent that you trust to shepherd you through the process is the single best way to wind up in the right home at the right price. Homelight suggests doing the obvious things like scouring online reviews and asking friends, family and local homeowners for referrals. But also watch out for red flags, like an agent who pressures you to buy, and always seek out an agent who specializes in your area and your home type.
It’s Been Collecting Dust on the Market
Generally, a real estate listing is considered “stale” if it stays on the market for more than 90 days. There are many reasons that a home can linger without attracting buyers. In some cases, it can simply be a bad economy or a cold market. Other times, listings go stale because there are major problems with the home. In other cases, it appears to potential buyers that something is wrong even if it’s not because the seller did a lousy job staging and showing the home. The No. 1 reason that homes stay on the market for months on end without getting any bites, however, is that they’re simply overpriced by a stubborn owner with unrealistic expectations.
It’s Priced Much Higher Than Comparable Neighborhood Homes
It’s always better to own the cheapest house on a good block than the nicest house on a lousy block. Don’t look at the estimated value of homes similar to the one you’re considering. Instead, look at what real buyers actually paid for comparable homes in the area. When you buy a property that costs less than comparable homes — “comps” in real estate speak — you can get into a block you might otherwise have been priced out of. Soon enough, the bigger, swankier homes will appreciate, and when they do, your home’s property value will tick up right along with them.
You Miss the Big Picture
It’s easy to develop tunnel vision on a property when you find the perfect home that checks all your boxes — but it’s a mistake to think that a home’s value is tied only to the home itself. If foreclosures dot the block or the neighbors don’t maintain their homes or yards, you might be buying into a neighborhood on a downward trend. Likewise if “for sale” signs linger for long periods of time, if the schools are underperforming, if the town’s population is in steep decline, if crime is on the rise, etc. suddenly, the perfect home doesn’t seem so perfect.
You’re Too Eager
Study after study shows that first-time homebuyers consistently overpay. Part of the reason is that they’re novices but part of the reason is also that their enthusiasm tends to outweigh their sense of caution. Maybe you’ve been looking for so long you just want to get it over with. Maybe you’re certain you’ve found the perfect home and you’re terrified someone else will snatch it up. Maybe you moved to a new town for a new job or your kid’s school and one or the other is about to start. Either way, when buyers allow their eagerness to trump their sense of prudence, the seller always wins.