Whether you’re buying or selling, knowing if a home is grossly overpriced is essential. If you’re selling, you need to make changes in order to actually sell your home and not waste time. Additionally, if you’re buying, you don’t want to spend more money than you need to. Glenn Phillips, CEO of Beach Homes Realty, discusses how to spot a grossly overpriced beach home.
- Days-on-Market (DOM). For most beach properties, a long number of days on the market indicates an overpriced home. This is because appropriately priced homes sell quickly. People are more informed than ever in human history about the market price and aren’t willing to pay more than that.
- Big Appraisal Gap. This happens when a buyer bids at a higher price than the appraisal price. While this was common during COVID, appraisals have caught up, and there are more transactions. So, significant appraisal gaps indicate grossly overpriced homes because the appraiser didn’t see their value.
- “Back on the Market.” The two most common reasons for re-listing a home are failed mortgage contingencies or sellers not compensating for property issues in the pricing. So, “back on the market” means the price is above what the banks will deal with or what a buyer would agree to for that property.
- Massive $ Increase. You can’t see this in every state, but in many, it’s public record what a property is sold for. In some cases, there’s been property restoration or remodeling, which explains price increases. Otherwise, sellers may just want to make money off of their property. However, the market prices homes based on what’s important, not for sellers to get a lottery ticket.
- Multiple Price Cuts. Particularly for homes with long DOM, price cuts indicate the price started too high. Additionally, it teaches buyers to offer lower than the most recent price.
- Sellers: No (or Few) Showings. Specifically for sellers, buyers shut down once you get about 10-15% above market price. They won’t waste their time because they don’t believe the seller is realistic. No showings on a property listed online and known means the price is too high.
- Sellers: No Offers ( or Similarly Low). For sellers, getting no offers is a sign of an overpriced home. Additionally, if buyers make similarly priced low offers, your home is overpriced. Buyers don’t coordinate with each other but are offering what the market tells them the price of the home is.
Getting the right price is equally important to both buyers and sellers. Using these tips will help you get the best deal for your beach home. Visit beach-homes.com to connect with expert beach agents ready to help you navigate beach real estate.