5 Signs the Home You Want Is Overpriced

By Bethany Hickey

It’s no secret that home values have skyrocketed, but now they’re hitting record highs. As of June, the average American home is estimated to be worth $350,213 — the highest ever, according to a recent Zillow report. Add that to the fact that 30-year mortgages are still getting an average rate of around 7.5%, and it’s more important than ever to look for a house worth its price tag.

But how can you tell if the house you want is overpriced? Here are five signs to look out for.

1. The house has been listed for a long time

When houses are selling fast everywhere you look, you’ve got yourself a seller’s market. But if the home you want has been listed for months and everything else is selling within two weeks, it’s likely overpriced. 

Compare other homes that have been sold recently by their prices, location, ownership history, size, and more before you make a move.

2. Houses are selling like hotcakes

In a fast-paced seller’s market, sellers are likely doing what everyone else would do — squeeze the rag and get the highest offer possible while the getting is good. When sellers know that inventory is low, they can raise their prices; classic supply and demand. If homes in the area are selling for similar values, it’s easy for a seller to justify the price. 

That may also mean you have to battle other offers and bid not only above your budget but much higher than the home is worth. But you’ll pay that price tenfold considering most mortgages last for 15 to 30 years and interest rates are currently around 7%. That’s a big price to pay long term, so don’t go over your budget or pay more for a house just to stay competitive.

3. Little to no offers

If no one is biting while you are, the price may be too high. Other buyers looking at the home may have been advised by their realtor or appraiser that it’s not worth the price. Another sign is hearing the phrase “low-ball offers” from the seller’s realtor, which suggests that potential buyers were trying to get the home at a lower price and the sellers aren’t willing to negotiate.

And if the sellers aren’t willing to lower the price, that can be a sign that they paid too much and need to jack up the price, creating a vicious cycle that you may fall victim to as well.

4. No open houses or restricted viewings

If you can only view the house at specific times, it has no open houses or there are odd rules during a viewing, something may be wrong with the house and it’s overpriced. If there is an issue, the sellers may not have the funds to fix it, and they may be trying to take advantage of the seller’s market to dip out. 

If you’re suspicious, schedule an inspection — and the buyer is the one that needs to request it, as it’s not required during a sale. An inspector can look for signs of a rodent or insect infestation, mold, foundation or plumbing issues and much more. And if there are issues and you still want to buy, consider the cost of fixing those problems before continuing with your offer. 

5. The house has had a lot of improvements recently

Many improvements in a short time could be a sign of a flip house, or the owners are doing everything they can to boost the price before they sell. However, to make sure you’re not overpaying, take a hard look at the improvements to make sure they were done well and that the price reflects the work. 

Also, not every improvement to a home can justify a huge price increase. For example, adding a sunroom is nice, but it doesn’t add to the square footage. Other improvements that typically don’t add any monetary value include new paint, bedroom-to-office conversion, wallpaper, new carpet or a pool.

Home shortages continue

Home values are off the charts, and the biggest reason boils down to a housing shortage. Those who bought a home a few years ago with record-low interest rates aren’t feeling pressured to sell and buy again, further contributing to the shortage. Mortgage rates aren’t likely to come down anytime soon, either, with signs that the Federal Reserve may hike up rates as high as 5.6% by the end of 2023, as reported by Forbes. 

People are either waiting longer to buy their first house or are forced to wait due to rising prices and high rates. The median age for a first-time homebuyer right now is 36 — an all-time high compared to 33 in 2021 and 29 in 1980, as reported by Finder. Younger generations are more likely to rent now, as well.

But for those in need of a house regardless of the market, it’s vital to take your time, compare prices, negotiate and don’t rush into a purchase. Buyer’s regret is real, and buying a house is a big purchase — and often an emotional one. Keep your wits about you and shop smart.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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