Should I make an offer on an overpriced listing?
There are several reasons why a listing might be overpriced. The sellers may be using a new or out-of-area real estate agent who's unfamiliar with local values and the sellers may be misinformed about the value of their home.
Sometimes sellers who purchased their home at a time when values were higher have difficulty accepting that the value of their property has dropped. Or, the property may be unique and difficult to price. Finally, the sellers may have bought another dTC property before selling and they need to sell for a certain price in order to complete the purchase.
Don't rule out making an offer on a house you like just because it's overpriced. But, before you spend time trying to buy a house that's priced too high, do some investigation. Ask your agent to find out why the house is priced high. Is it agent error, uncertainty about the price, or unreasonableness on the seller's part? If the sellers will only sell if they get a price that's too high for the market, don't waste your time.
Find out how long the property has been on the market. Have there been any offers? Try to find out what prices the sellers turned down and how long ago the offers were made. Have there been any price reductions? What is the sellers' motivation to sell? If they have bought another house on a noncontingent basis, or if they've accepted a transfer, they may need to sell regardless of the price. In this case, it's usually only a matter of time before they accept a realistic price. Likewise, a builder with surplus inventory may be willing to negotiate rather than incur the costs of holding onto the properties longer.
FIRST-TIME TIP: Trying to buy a house that's listed too high takes patience and determination. You may not get very far if you make a low offer on an overpriced listing that's new on the market. Sellers of overpriced listings usually have to test the market before they'll entertain a lower price.
But, after the house has been on the market awhile, make a realistic offer and arm yourself with as much ammunition as possible. Get pre-approved for a loan so the seller knows you can close quickly. Have your agent provide comparable sales information to justify your offer. Find out about the sellers' needs so that you can tailor your offer to accommodate them.
Be prepared for rejection. The sellers may respond unreasonably to a lower price. However, they may yield some ground after countering back and forth. If you reach a stalemate, drop the negotiations and make another offer a few weeks later if the house is still available. Given time to ponder, sellers often become more willing to negotiate.
THE CLOSING: The key to making any negotiation work is to explore every option to try to find a common meeting ground. It usually takes more time and effort to buy a house that's listed too high. But if you stick it out, it's worth it. Plus you'll avoid the frustration of competing with multiple buyers.
Dian Hymer's column is syndicated through Inman News Features. Send questions and comments care of Inman News Features, 5335 College Ave., No. 25, Oakland, Calif. 94618