How To Make An Offer On An Overpriced Home

Overpriced Home PictureIt seems as if overpriced homes are everywhere these days. They are beginning to dominate the Q&A sections of many real estate web sites.

One of the great things about having a real estate blog is that we get to see much of what our customers are thinking and doing in their efforts to buy a home or sell a home. Just the other day, I saw the following question that was entered into a search engine which pointed the searcher to our site:

How do you make an offer on a home that is overpriced?

While this seems like a simple question that should have a very simple answer, it made me realize that this home buyer, like many soon-to-be home buyers, does not understand the different types of home sellers that exist in today’s real estate market.

Understanding Home Sellers

With roughly 60% of the homes on the market failing to sell, it is important for a prospective home buyer to understand that there are home sellers out there with different levels of motivation. Choosing the sellers with the highest motivation will allow the buyer to make a safe purchase in today’s crazy real estate market.

I like to classify seller motivation levels in three distinctly different categories:

  1. Considering Selling – This homeowner does not really need to sell the home. If they can get their price, they will sell. If not, they will stay in their home. This type of homeowner will not sell their home in today’s market, so home buyers who actually view the property are just wasting time. This is where you will find many an overpriced home.
  2. Want to Sell – This homeowner has a real need to sell, but has not priced the home correctly for one of many possible reasons. Often times, this homeowner feels as if they have plenty of time to sell, so they are “starting high and will lower the price if it does not sell.” Due to the extreme glut of homes on the market, this homeowner will most likely join the ranks of the 80% “Failed To Sell” group. This is yet another example of where to find overpriced homes.
  3. Must Sell – This homeowner absolutely must sell the home, and the asking price of the home for sale demonstrates this. It is the best buy in its category, and all realistic home buyers view the house. This home has an excellent chance of selling, even in a very difficult real estate market.

How To Do A Smart Home Search

Homes for sale in TallahasseeThere are two primary reasons to search for a home for sale in Tallahassee. The first is to get a “feel” for how much home you can buy within your budget, and the second is to target specific homes that you actually might want to buy.

If you want to get a good idea of what is for sale and how much home you can expect, all you do is a simple price range and area home search. I would recommend using a map-based MLS home search tool that allows you to zoom in to the area in which you would like to live. You can then quickly see the affordability of the homes in the neighborhood. Many of these will be overpriced homes, but some nuggets can be found as well.

But when it comes time to selecting the homes that will make your final list, I strongly recommend working with a real estate professional who really knows how to extract the best buys from the housing market. This is so important to getting a good buy in today’s market that I cannot emphasize it enough. Your final list of properties to inspect should not include overpriced homes!

They key to doing a smart home search is to eliminate the first two types of home sellers. If you limit your home viewing to just homes of highly motivated home sellers, than the likelihood of you overpaying for a home is close to zero! Choosing only motivated home sellers allows you to make an offer on a home that ensures the resulting sales price is a smart buy.

How To Make A Great Offer To Buy A Home

I have written on this topic often, as it is one of the most asked questions of both new and experienced home buyers. The key to making the best offer is to make it so compelling that the seller is scared to lose you as a buyer. The process of making a great real estate offer is outlined in a blog that I wrote a while ago, and it includes the following key points:

  • Do not view properties that are priced poorly
  • Research the likely sale value of the home
  • Understand the likely motivation of the decision maker(s)
  • Remove as much of the emotion as possible from the home buying process
  • Make a compelling offer to buy a home

If you would like see the explanations of each of these, you can follow this link to making a compelling offer to buy a home.

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14 May 2013
Joe Manausa
FL
Century 21
Last modified: May 14, 2013
About Joe Manausa

Joe Manausa, MBA is a 22+ year veteran of real estate brokerage in the State of Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.

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Comments

  1. Great blog post Joe! We have a lot of Sellers in Evergreen who aren’t quite sure if the market has effected their real estate values yet… As though maybe the market price went down on the neighbors house but not theirs! In fact just yesterday I showed a new listing in one of our luxury home communities that had been purchased in 2009 for $813 but is now marketed at $845k . I asked for a list of improvements to the property since the 2009 purchase and the listing broker described his pricing strategy as “reflecting a gap in pricing for this sort of home”.

    Hmmm. As a buyer agent this would be a tough conversation, “Well, I know we’re smart and all but even though the market is down since the Seller bought this home and has done negligible improvements that amount to maintenance, we should consider this $32k price increase since the Seller wants more for it now…”

    Of course, the listing agent also said, “Bring an offer!”

    I’m pretty sure I’m going bald.

  2. Ben Koshkin says:

    There are some important elements that a potential home buyer should also take into consideration before making an offer. You need to make a list of the items that will need to be repaired or replaced including the estimated cost. You also need to determine the taxes, home owner’s association fees and any other fees that might be due on the home. By determining these items ahead of time you can better compare one home’s real cost to another before making the offer.

    Ben Koshkin

  3. easy way to be clickers says:

    great review bro

  4. Good informations man

  5. This is one of the best articles I’ve read in ages. I guess we all think our home is worth more than it really is.

  6. Nice dude…,
    I love this words: “The key to making the best offer is to make it so compelling that the seller is scared to lose you as a buyer” .

  7. Good information. I would, however, also recommend that home buyers extend the upper limit of their price range when doing a search because I think one of your second reasons could include poor council from the seller’s agent during the listing appointment . Buyers won’t want to miss out on an otherwise great house just because it falls outside their price criteria. That’s where we as buyer agents need to come in with strong negotiating skills on behalf of our clients to get the price where it should be.

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