How To Handle An Overpriced Home

Today's blog we will be focusing on how do you handle buying a home that is overpriced.  When you choose to utilize a Buyer Broker you might find that they are sending you homes that are above your price range, we usually prompt you to get a mortgage pre-approval to make sure you aren't disappointed if you can't afford it later on so why are they sending them to you ? Just because the home is listed for a certain price, does not mean that the home is worth what it is listed for.

Finding your new home can be an overwhelming endeavor, the first step to making this a bit easier is by utilizing a Buyer Broker.  Their is an entire blog dedicated to explaining what the job is of a Buyer Broker HERE, or if you prefer a video blog HERE.  

Here are the most common reasons a home ends up being overpriced:

• The agent did not educate the homeowner about the current market price prior to taking the listing. 
• The homeowner may need to net a certain amount of money, in order to avoid the sale of the home being considered a short sale.  
• Lack of comparable homes in the area with similar style or characteristics, this is often common in areas where you find Historical Homes or Horse Property on Long Island.  

When it comes to a home that is overpriced in any area negotiations can go a few different directions, but the first step is always the same.  

• Step 1: You will want to sit down with your Buyer Broker, and look at the comparable homes in the area to come up with an educated offer, because your agent will want to not only present your offer but the comparable homes that back up your offer.  

Once your offer has put in your first offer is when you will begin to strategize what kind of negotiation style you will use when it comes time to place your counter offer.  

• If the homeowner comes down a significant amount, that is a sign that their agent is educating them about what their home is actually worth in the current market.  You will want to do the same with your counter in order to show them that you are a serious buyer ! 

• If the homeowner barely budges off their price, your agent might be able to get some clarity on why they are priced so high during this conversation.  Their might be a certain amount they need to net in order to not have the home be a short sale or they simply may believe that their home is worth more.  

This is where things can require a bit of patience, sometimes your best bet is to back off a a seller and give them time to sit on the market with no other offers coming in they might be a bit more willing to listen to the advice the listing agent is giving them regarding their price.  When you use this strategy their are 3 important pieces of advice I always give, because of course their is risk in this strategy.  

• Make sure you have presented at least 2 reasonable offers, if you are still significantly apart this is a circumstance where you may want to let them have more time on the market.  
• Make sure your agent keeps in contact with the listing agent during this time, you don't want to wait to see a price reduction on MLS because than you may find yourself in a bidding war because of other buyers seeing the price change.  
• Continue to look at homes with your agent, their is no guarantee that the homeowner will come down in price and you don't want to miss out on another home while your focused on the overpriced home.  

Once the homeowner has had some time sitting on the market you will than see if they really want to sell their home, or not.  The next step isn't what you may think ! 

• Before you place another offer on the house schedule another showing with your broker to go and see it again, ideally when you know the homeowner is going to be home.  There are 2 reasons for this: first they may have done work to the home since your original visit, and them seeing that you are the buyer who placed an offer will again show you how serious you are about purchasing their home.  

• Make sure when your agent present your next offer they ask to present the offer directly to the homeowner, with the other broker present of course. This way your agent will be able to remind them of all of the specifics of your offer, as well as updated comparable homes ! 

• You may still need to do a bit of negotiations, and of course have your home inspection done before you go to contract but hopefully this will have gotten you the home of your dreams ! You can find my blog specifically about home inspections and what to expect HERE. 

In all of my years in Real Estate I have helped many buyers find their dream home, and I can say with complete certainty that for every buyer their is the perfect home out there !