Properties selling over appraised values, Sales prices that end up well over the list price. A 2017 report by Harvard researchers shows that 1 in every 3 renters and buyers overpay for their housing. This sums to a total of 39 million Americans. First time home buyers are more likely to overpay on a house. First-timers are more likely to pay thousands of dollars more than what an experienced buyer would pay for the same property.
First-time buyers overpaid an average of about $2,200, or 0.79%, for their homes, according to senior economist Jessica Shui and economist Shriya Murthy of the Federal Housing Finance Agency.
Their research doesn’t mean that you’re destined to spend too much when you purchase your first place. With some expert advice, you can pay a fair price and nothing more.
Here Are Some Signs To Show You’re Overpaying For Your Home
- Not comparable listing price as compared to similar homes in the same neighborhood:Understanding the local market value of similar homes in your neighborhood should be the first point. Rather than looking at what similar homes are valued at, potential buyers should instead look at the price the home was finally sold at.
- The Home Has Been on The Market for A Longer than Usual Time: Beware of homes that takes forever to sell. It generally means they are often overpriced. If the property has spent more time on the market than similar homes nearby, it’s a good sign that the property had an exaggerated listed price. However, inquiring about properties that have stayed for months or years on the market comes with certain advantages.
- Undisclosed maintenance and foundational problems: Even if a home doesn’t come with a huge price tag attached to it, you need to be sure you’re paying for what’s worth your money. Before you go ahead to make an offer on a property you feel it’s a great deal, be sure to know if the property comes with expensive maintenance issues or not. A poor plumbing system or badly-built foundation may end up costing more in the end. Be sure to do your homework before making a final offer for a home.
- Overpaying Due to Convenience: In popular neighborhoods and price points, some buyers are feeling too compelled to pay more than the market value of a property if they need it so badly. It is said that homebuyers who tend to overpay for a property out of convenience are more likely to regret their decision down the line. In case you need to relocate to a specific neighborhood within a given time, be sure to do your research before making a purchase. Spend some quality time on the web comparing homes in the neighborhood.
In case you have limited knowledge of a specific neighborhood or you’re just trying to purchase your first home and fear to overpay, a professional would be of great help. Real estate agents are experts when on finding a perfect home at a great price and in your preferred neighborhood.
An agent comes with comprehensive knowledge of the market allowing them to tell you what exactly is a fair price. When it comes to a life-changing decision like buying a house, it’s always a great idea to leave it to the professionals.