Overpaying for a home is an issue Albuquerque home buyers are experiencing right now. Markets across the city and country are incredibly hot. Housing supply is low, and demand is high. In many cases, buyers find themselves in bidding wars when they attempt to buy a house.
You are more likely to overpay for a house if you are involved in a bidding war.
You’ll spend more on everything if you overpay for a house, including the down payment, closing costs, and the interest you pay over the years.
How do you know if you may be overpaying? You must pay attention to the following red flags and signs when making a decision, regardless of your emotions.
The Listing Price Is Different From Comps in the Area
It’s a possible red flag if the listing price of the home you’re interested in is out of line with the sales of comparable properties in the area.
Perhaps the seller priced their home according to the values of neighboring houses rather than based on what they’re selling for.
The services of an experienced real estate agent, like Sandi Pressley and her team, who understands the current market can be very helpful in this situation.
There is more to a house than its value. In addition to considering the community and school district, there are many other things to consider. Ideally, your realtor should already be aware of these factors and will be able to negotiate on your behalf.
Homes in the same neighborhood should have similar prices. Although there may be differences based on factors like size, the features should be similar enough that you can use comparables as a guide.
Online Estimates Are Lower
Over the past few years, online valuation tools have become much more accurate.
You could be in danger of overpaying if you find online tools that value a home lower than the list price.
Keep in mind that everything needs to be viewed in context, so if the kitchen has been recently renovated, then the home could have a bit more value.
The Listing Price is Similar to Homes No Longer on the Market
This red flag can take a little more research to figure out but if you’re looking at a home with comps similar to sellers who have taken theirs off the market, keep this in mind.
Homes that have been removed from the market will be available to an agent. If the asking price on these unsold homes is similar to what you’re looking at, it could be overpriced.
It’s Been on the Market for a Long Time
If a home has been on the market a long time, you could be at risk of overpaying. A home that’s priced too high doesn’t get showings or interest and then doesn’t get offers. You need to think carefully about why other people might be passing on the home.
Of course, if you’re in the situation where you’re in a bidding war, it can be different. You might be at risk of overpaying simply because you’re caught up in the emotion and the competitive element. If you’re going well beyond your budget simply because you end up in a bidding war, it’s probably time to take a step back and reassess.
No matter the value of a home, if you pay more than what you can comfortably afford, then you’ve ultimately overpaid.