Homeowners, especially first-time home buyers, are often anxious about paying the right price for their home, and with good reason. Statistics from 2016 show that first-time buyers overpay by about $2,860 on average, or a single percentage more. Overpaying increases the distance between how much you owe on the house and how much the house is worth, which is bad financial practice.
To make sure you’re paying the right amount for a prospective home, here’s what you need to watch out for:
#1: The Listing Is Old
When a home is on the market for longer than average, it’s an indicator that its price exceeds its value. An overly aggressive list price will not perform in the market, causing it to list for an extended period of time.
#2: The Listing Price Is Higher Than Other Homes in the Area
Do some legwork and check out other homes in the area or in comparable neighborhoods. Is the listing price in the same ballpark? If not, then the home itself is likely overpriced. This is also why it’s vital to have an experienced real estate agent helping you—our knowledge of the local market and housing prices means we can help you avoid a home that’s listed for more than it’s worth.
#3: The Home Has Hidden Maintenance Problems
A home might seem really well-priced until you do an inspection. If you find foundation problems or septic issues that will require extensive replacement or repair, you’d likely be overpaying for the home—even if the price is identical to other homes in the neighborhood. You might be able to use the repair issues to bargain with the homeowner to bring their price down, or you could demand that the homeowner fix those problems before you buy. Either way, that could solve the problem of an overpriced home.
#4: The Neighborhood Isn’t So Nice
You’re not just buying a home; you’re buying a community. Houses will depreciate in value while land increases in value, which means what you really want is a good home in a great area. A Brand-New home in a mediocre area will eventually be worth less than homes in a great neighborhood. If a house is listed for more than the neighborhood warrants, it’s overpriced.
Experts recommend looking for “walkable” neighborhoods. New businesses, mass transit, good schools, parks, and public spaces are indicators of growth potential, which is what makes an area likely to be valuable. Even if the house needs some repairs, owning in a thriving neighborhood is worth the money.
If you’re looking for a home and you’re unsure about where to look, speak to Santa Clarita realtors, Farris and Chase. Our office has helped countless buyers and sellers navigate the housing market with confidence. Call (661) 888-4493 today!