Today's real estate market is saturated, and there are plenty of homes in foreclosure. These statistics make the market one of the best for buyers in a long while.
Still, it's very possible for you to find a home that's over priced and be unsure how to handle the situation. Don't write off the home that's over priced. There are a few legitimate reasons that the price might be a bit high.
- The homeowner (and their realtor) has not kept up with the comparable sales in the market. Home prices have fallen very rapidly very quickly in some areas. If the seller and his or her realtor haven't kept pace, they may not realize that their price is out of the ballpark.
- The homeowner is under water on their mortgage. If the homeowner purchased the home recently, or if they simply paid too much, or over mortgaged, the home may not be worth what the homeowner owes. This homeowner is simply trying to get out without losing his or her shirt.
- The home has features that can't be duplicated. Before you write off a home as "over priced" because it is priced higher than others around it; go and see the home for yourself. If it has features that are very rare, such as a private lake, the home may legitimately be worth more than others in its area. This doesn't mean that you are personally willing to pay extra for those features, but they do explain the price difference.
If the home you're looking at is over priced for one of these reasons, it doesn’t mean you necessarily have to pay the higher price. The homeowner may still be willing to negotiate if he or she realizes that they must come down in price to close a deal. However, it does mean that you shouldn't have your heart set on that particular house and a rock bottom price.
Determine what you're really willing to pay for the house. Start by looking at comps in the neighborhood to determine a starting point. If you're not willing to pay the area's comparable price, then the house is not for you. But, if the comps fall into your price range, try making an offer on the house that is slightly lower than the area's comparable prices. This gives you a bit of room to negotiate upward and still get a fair deal.
Be Prepared for the "No"
Some homeowners are simply not willing to negotiate very much off the price they have set. They may not be in a hurry to sell, only looking to make a move if they can get the price they want. Making an offer is the only way you can really determine if the homeowner is serious about selling. Don't be badgered into paying more than you have budgeted. Make sure the process is a business transaction. When you get emotionally involved in a house, you fail to remember that there are plenty of other houses available.
If this homeowner won't negotiate with you, there's one right down the street who will. In today's market, there may be a few homeowners who take a hardline on the price of their home, but for every one of those, there are at least two who can offer you a deal that is more than fair to you as a buyer.