Help, the house I want is overpriced!

You’ve found the one. This is it! Your home search can finally end now; the home of your dreams is for sale and within reach…if they would only lower their price. This scenario, while not commonplace, happens more than I’d expect. A homeowner can market their home for sale for many reasons and not everyone is under duress to liquidate their assets. Will the owner go as low as you’d like? Is presenting an offer worth your time in such scenarios? And what type of expectations should you have from an owner who has priced their home above all the others on the market in their area? The answer is, it depends on the particulars.

Luxury versus the average price point

The more ground there is to cover, the more opportunity there is for an owner to reduce. That is not to say that the owner will reduce, however, just that the chances are better. If you are looking at homes priced over $1 million or even over $500,000 your chances of getting the reduction you need are better than if the home is for example $200,000 to $300,000. As long as the property isn’t a distressed sale, the owners of a luxury home are more likely to be able to sell their home for less than an initial list price that is overinflated. Conversely they may have no real need to sell and the ability to wait for the price that they want. Have your agent speak with theirs and find out their motivation level. If it is a luxury home with custom features such as lake access, acreage, stables or other unique and valuable features, make sure you are comparing apples to apples when evaluating sales for your offer price. If a home is high-end and fills a niche that has popularity it my not be as overpriced as it would initially appear.

Apples to apples

This is another point to consider. How are you determining the home is overpriced? I represent both buyers and sellers so I’ve experienced both sides of this coin. It’s very easy to cherry pick comps or sold homes in the area to support your offer price. Just be sure that the homes you are using to determine this home’s value and what you want to pay are in fact homes that are similar enough that an appraiser would use them in their report. If the home you’re thinking of offering on has a pool, don’t look to sales in the neighborhood without pools and forget to adjust upward. The pool adds value. Same goes for a distressed home in need of work contrasted with the same floor plan remodeled and offering a new roof and appliances. The second home in that comparison will be valued over the first, so plan offers accordingly.

Timing

It’s been said timing in life is everything, and I can’t disagree. Maybe an owner wasn’t ready to drop the price to match local sales of similar homes at first. A few months on the market may have been just the evidence they needed to prove to themselves that those granite countertops and wood floors aren’t going to fetch them that extra $50K after all.

However, if a home has sat on the market many months and is still priced above where you feel it should be that could be a sign that the owner isn’t willing to drop their price. Get some communications started between your agent and theirs to see.

To answer the question on whether an offer is worth your time, it’s never the wrong thing to put forth an offer on paper and have it presented formally to a seller if you’re serious about buying the home. Temper your expectations in situations where the seller has overpriced their home and first make sure it is in fact overpriced. Are there are sales in the neighborhood that an appraiser can look to that are apples-to-apples comparisons? If they justify the asking price the owner will simply be less inclined to negotiate, and with good reason. If there is data to support the asking price, owners are not negotiating down in large amounts to allow for things like cosmetic changes. In these cases present your offer, inquire why they are selling and explain your offer price. If the data backs you up and the seller is reasonable and motivated you may have a chance. If you’re simply angling to reduce the price by the amount your custom remodel will cost you, you’re not likely to find luck in this market.