IF YOU WANT A SOLD SIGN AVOID LISTING AN OVERPRICED HOME
If you’re thinking about putting your house on the market one of the worst things you can do is list and overpriced home for sale. A motivated seller will list their home appropriately according to market value but those who want more may go above and beyond but that comes with many risks.
Over the past few months our neighbour found their dream home out in the country and the only way they could look like serious buyers was to list their house for sale. The only problem was that the house they were interested in was a bit over their budget so they took a house with a market value of just over $700,000 and listed it for $900,000 which was grossly inflated.
There were two reasons the homeowner told us for this and one was again to look serious to the seller of the home they put an offer on and in hopes someone rich would come along and buy their house without question.
We live in a popular area of the city where homes don’t often come up for sale so when they do you can imagine how fast they sell. Most homes in our area average about 7 days on the market (DOM) and anything more might be dictated by price and whether it is a buyers or sellers market.
After only living in the home for a year they did nothing more than have a company come and install a fence around the property for around $11,000. (I’m just rounding figures) When they realized that city-living wasn’t for them they wanted out but another offer came in higher than theirs so they lost out, so they thought.
After removing their overpriced home from the market it turns out that the other buyers mortgage fell through. The buyers came back and said if they wanted the house it was theirs but like previous they still needed to sell their home.
They were excited so back to the start they went with their real estate agent who I would assume told them that an overpriced house likely won’t sell convinced them this time around. The house is now priced with-in market range for the area at $750,000 which is $150,000 less than what they originally had it listed for two months ago.
No one has bought yet and it has been around a month. What could possibly be the problem? Well when you list an over-priced home people notice, especially those who live in your neighbourhood. At least we do because we were in awe at how much they were asking for it without any renovations since moving in. Even so, just because you renovate your house that doesn’t mean you will get more money when it comes time to sell it.
That $15,000 interlocking brick driveway, new path, updated kitchen or new flooring means nothing if the house next door or up the street that sold last month similar to yours sold for a price you can’t fathom listing your house for. The problem with some homeowners is that they have so much pride in their home and believe it is worth more than what it actually is.
Before you start getting involved with renovations and they can cost thousands of dollars make sure you are aware that you may not recoup all that money if you decide to sell your house. A nice driveway is just that, a nice driveway because most buyers really don’t care about the driveway so you might as well kiss that money good-bye. Consider it an accessory or decor for your home that stays with the home in which you paid a fortune for without any decent return if at all.
Pitfalls of overpricing your home
Our neighbour unfortunately still has what we still consider an overpriced home on the market and it hasn’t sold as of yet. I know there is a saying that states there is a buyer for everything but in some cases you may miss out on real estate opportunities if you have an overpriced home. Don’t fool yourself and think that buyers don’t know the price of your house is inflated, they do know but whether they want to spend the money to buy it is another story. Would you?
My realtor overpriced our house? Don’t blame your realtor because it is up to the homeowner to also do their due diligence when it comes to selling their house. A quick look on the MLS (Multiple Listing Service- Realtor.ca) is one of the first ways a homeowner can see what prices houses in the area may be listed at. Second, the real estate agent should provide past sales in the area to compare to the seller.
The realtor you choose should be one your trust and like any industry there are shady realtors out to make a buck and will list your house higher in hopes of getting a better cut. This is what happened to Mrs. CBB and she takes full responsibility for listening and hiring an agent who didn’t really care about her just the money. After one year her house finally sold but only after lowering the price by $50,000.
Consider this, what if a serious buyer wanted to purchase their home the first time it was listed at $900,000 but realized it was another overpriced house to avoid and then find out it was listed again. When their real estate agent tells them the new price of the house is $150,000 less they WILL want to know why.
An excellent realtor will know the area, has toured the area and been in and out of as many houses that have come up for sale so they know what they are talking about from personal experience. This is why you see so many realtors go to open houses not only for their clients but to connect with homes in the area which increases their knowledge of them on a personal level.
Some buyers start to wonder what else is the homeowner hiding and why are they being shady like that when market value is far less in the area. I’m betting that those buyers keep on going and eventually find a house that is reasonably priced where they aren’t wondering what the homeowner is up to.
This means that the seller misses out on a buyer and they are stuck in the house for even longer. Word spreads fast too and although real estate agents might be there to pick up the pieces and explain what might have happened buyers still become leery about making the biggest purchase of their life with a shady seller who wants more than their house is worth.
Many home sellers think they can use the approach of listing their house for a high price and negotiating down to what they really want which is likely what the original listing price should have been. This means the seller loses nothing and gets exactly what they wanted from the house.
I’m sure you’ve heard of sellers who have multiple offers on their home and have been fortunate to sell their house for more than what they listed it for in a hot sellers market. This means there may be less listings available and more buyers on the hunt. In some cases the homeowner under-price their home in hopes of attracting attention from buyers who will drop insane amounts of money in a competition to win the house.
This is a bad game to play but it’s played and there are winners and there are losers. The same goes for the overpriced house where the seller lists high but if he sells it for less than they are still winning because the price-tag was above what they would have got in the first place had it been listed for market value.
The loser will always be the buyer who buys an overpriced house unless they plan to sit in it for many, many years. A neighbour up the road who bought and overpriced home just one year ago had to sell it for enough to cover her mortgage and costs. Luckily she did but there was no increase in value she basically walked out with what she walked in with but not everyone is this fortunate.
The effects of overpricing – How to know if your house is overpriced
- Overpriced home might not sell
- Lower offers than anticipated
- Too many days on the market
- Added stress for all parties involved
- Nosey neighbours
- Realtor frustration both the buyers agent and the sellers agent
- Buyer frustration
- Negotiation frustration
- Missed opportunities for the seller (looking to buy another home)
- Vacant property
- Two mortgages if the seller has bought another home
- Low-ball offers (to the seller but realistic to the market)
- Other listings in the area sell before yours
- Buyers will tell you or your agent straight up you have an overpriced home
Buying an overpriced home means that you have to be prepared to take what you get and possibly risk losing money if you have to sell fast like our neighbours did up the road. They were lucky but you might not be so think about the reasons why you might put an offer in on an overpriced home and whether you really can afford it.
Discussion: What other pitfalls can you think of when buying an overpriced home?
CBB Home and Blog Happening’s
Another week has come and gone and I’m still sick but at least I don’t feel like the only one with a box of Kleenex next to my every waking move. Both our little guy and Mrs. CBB are ill as well lots of our friends and co-workers so I’m not sure who’s spreading what but it’s going around fast the past two weeks since school started. I’m not blaming it on school but I will say the little kiddos had it first! Haha.
I’m working on getting rid of our old vehicle that is in great shape but will cost about $1000 to fix but it’s only worth $1500. What would you do? I was thinking about just scraping it and taking what we can get. I’m not sure if anyone would bother buying it. If you have any experience or advice I’d love to hear about it. Leave me a comment below.
Lots of cookies have been baked in our kitchen over the past couple of weeks as I’ve been sick so get ready for some awesome keto cookie recipes coming your way. I am almost certain I have created the BEST Keto cookie around. It’s chewy, crunchy and delicious. Finally a low-carb, keto cookie that is not soft-baked.
Other than that we will getting geared up for our Fall outdoor clean-up and setting up the decor for the season. I’m hoping this year the chipmunks might leave our corn decor alone. Last year they ate it all. Ha!
Have a great couple of weeks everyone.
Fan Deal of The Week
If you have a deal you’d like to be featured on CBB simply email me at canadianbudgetbinder @ yahoo . ca with a photo and small write-up of what you’ve found.
Here are this weeks deals:
- IKEA table and 4 chairs $40
- Mittens $.50 (asking was $1)
- Rain boots $1
- Griddle, pan and silicone muffin pan $2 (asking was $3)
- Ladies clothes (6 items including one BNWT, one Roots sweater) men’s t-shirt and letter stickers $8 (asking was $15)
- Ladies sweater BNWT $4 (asking was $5 and tag said $29.99)
Total spent $55.50
Budget Recipe Find
Whenever I think of FALL I have visions of Apples and Pumpkins in my head and this recipe for Apple Fries with a Creamy Caramel Sauce are perfect! With apple picking in full-swing across Ontario this simple recipe will sure to be a hit!
DIY FALL BUDGET Projects
Since Fall is officially starting this weekend I thought I would engage with the Fall Bucket List only because I feel this time of year deserves the attention. In our family Autumn is our favourite time of year and when I read this bucket list I realized that we do almost all of these every year because it is soothing to the soul. We just feel so good about this time of year and I think many people can relate and I’m not sure why but it certainly is an in-between of Summer and Winter.
I definitely can’t wait to get lots of photos of us playing in the fallen leaves which we do every year as a family and LOVE IT and don’t care who sees us being goofy. I’m most certainly going to make at least one or two pies this season but I’m not sure what kind yet. I know there is this keto apple pie filling that can be made with zucchini so I might give that a go and see what happens.
What is a MUST on your Fall Bucket List?
My Thoughts Corner
Saturday Search Term Giggles
Every week I get tens of thousands of people who visit Canadian Budget Binder because they did a search online and found my blog. (SIC) means I’ve copied the text exactly and it has spelling errors.
Most times funny, Sometimes serious.
- Money not women– women not men goes both ways
- What are the rules for paying back OSAP– Rule number 1 – Just do it!
- Should you buy Walnuts from Bulk Barn?– I don’t see why not
- Keto ice-cream Sanwich– That would be a SANDwich haha my son calls it SAMwhich
- When an item doesn’t scan is it free– Hahah, I wish! Not even close.
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Hey…if you see any mistakes let me know. I’m not an editor just a guy who likes to write and yes I make mistakes.