Buying a home is an exciting and celebratory milestone. Unfortunately, some homebuyers end up overpaying for a house and may not know if they’ve paid too much or are simply victims of a seller’s market. And once you overpay for a home, you could be faced with several challenges. For instance, you could be stuck with a high mortgage for years, struggle to build equity since the home price exceeds its value, and may have minimal-to-zero ROI. So, how do you identify an overpriced home in San Antonio? Read on to learn!
Location matters when determining the price of a home. What prices have other homes in the area sold for, what’s the price range of the active listings, and what was the price of any expired listing? Your real estate agent can help you pull out and analyze a comparative market analysis (CMA) to learn the price of homes in the neighborhood. Typically, your agent will pull out comparable sales, or comps, in San Antonio (recently sold homes that are similar in age, size, floor plan, and other specs to the property you’re considering to buy). If a home you’re considering purchasing is priced significantly higher than a similar house in the neighborhood, it could mean the home is overpriced.
Days on the Market (DOM)
Another way to identify an overpriced home in San Antonio is how long it has been on the market. And while some homes may sit on the market for other reasons (such as home condition), a higher DOM is usually an indication of overpricing. Basically, a fairly priced house will sell within a couple of weeks, so if you see a home that has been on the market for months, then chances are, it’s overpriced.
Moreover, homes noted within the same type of market should typically go under contract in similar timeframes. For instances:
- Seller’s Market: Homes listed in a seller’s market tend to go under contract quickly. According to the National Association of Realtors (NAR), homes were averaging 16 days on the market in 2022. So, if the property you’re interested in hasn’t received an offer after a month of being listed, it may be a sign of overpricing.
- Buyer’s Market: Since the number of listed homes exceeds that of buyers, homes tend to sell slowly in a buyer’s market. But if a home hasn’t received an offer after 3-6 months on the market, it could be an indication of an overpriced home.
No House Viewings
The number of house viewings can help determine whether a home is overpriced. If you attend an open house, and only a few people attend or are interested in the home, then there could be an issue. Stay away from homes that generate little-to-no interest, as they’re more likely to be overpriced.
Low Online Traffic
The internet has changed the real estate industry over the past few years. When buyers are looking for homes, their first stop is often online. The good news is that many online platforms can allow you to see what type of traffic a home listing has received. From saves, favorites to views, any listing that has low traffic can be a warning that the house is overpriced.
The House Has Gotten No Offers
Your real estate agents will know if any offers have been made on the house you’re considering. If a home has been on the market for months and hasn’t received any offer (despite several open houses), it’s likely that the homeowner is asking for a far higher price than prospective homebuyers – or the market- think the home is worth. Getting zero offers or low offers is often a strong sign that the seller is asking far more than what the real estate market (and homebuyers) think the home is worth.
Low Ball Offers
Moreover, if your real estate agent informs you that the house has received only low-ball offers, it might suggest the seller has overpriced the house. More so, several low-ball offers in the absence of any counter offers may also be a sign that the home seller has no interest in negotiating with any offers below the asking price.
A Home that Has Been Under Contract Severally
A homebuyer’s financing can sometimes fall through, causing the seller to relist their home after it’s been under contract. But, if a house swings from under contract (or pending) to being back on the market several times, you and your agent might want to do more due diligence. That’s because a house being relisted after being under contract could indicate that its market value is appraising lower than the seller’s asking price.
Homes with Expensive, Customized Amenities
The more unique an update, the less universal appeal the remodel will likely have. For instance, pickleball might be trending as a new recreational sport, but that doesn’t necessarily mean the indoor pickleball court that the seller installed will be a big hit in future. So, if a seller has set a listing price to recoup the costs of customized renovations they’ve made, it may mean you’ll have to overpay to purchase the house. Keep in mind that with such a home, you may have to spend more to “renovate out” some of these unique amenities that you’d rather not be part of your home.
Pro Tip: Work with a Skilled Buyers Agent!
There are several ways to identify an overpriced home in San Antonio. But ultimately, it’s wise to work closely with your agent when buying a home. Our seasoned realtors understand the San Antonio housing market and have experience buying and selling homes in the area. We’ll also research the home’s history and see how the property stacks up to comps in San Antonio to ensure the market supports the seller’s listing price and help you make a competitive offer. Call us, and let’s guide you through your homebuying journey and ensure you don’t overpay for a house.