7 unmistakable ways how to know if a house is overpriced

Finding the perfectly priced home


When making one of the most important financial decisions of your life, it’s sometimes daunting to fall in love with your dream home and worry if you are overpaying for an overpriced home.

Luckily, if you pay close attention, the real estate market will tell you if the list price of a home is overpriced, just right, or too low. Looking at the buyer demand for similar homes and at the data showing what similar houses have sold for is your first step.

The importance of pricing in real estate

Pricing a home to sell is its own marketing strategy. Sellers can list their home at fair market value, but that doesn’t always bring in the most, highest and best offers. Slight adjustments to a list price can greatly affect how many home buyers become interested in a house.

Luckily for buyers, if a home is overpriced, there are usually telltale signs. Your real estate agent can point out these signs, research the value of homes you are interested in, and advise based on buyer demand and trends in your market if your offer is a good investment.

Reasons why overpricing home is bad

For sellers, an overpriced home is the kiss of death. Even in an extreme seller’s market where buyers are expected to put in offers well above the list price, if a home is overpriced and doesn’t get buyer activity within the first few weeks of listing, it will sit stale and home buyers will assume there is something wrong with the property. Ironically, overpricing a home can lead to more low ball offers than if a seller were to underprice a property due to negative buyer perception.

Information is abundant on the internet, and the public can easily compare an overpriced home with homes that were priced correctly without leaving their house. If buyers decide that a home is overpriced from their phone or computer, they likely won’t waste their time and make a trip out to see the home in person.

Below are the 7 unmistakable signs of when you can tell if a property is an overpriced home.

1. Compare the asking price to other homes in the neighborhood

Review recently sold neighboring homes that are similar to the home you are looking to buy. Take note of the square footage, lot size, recent upgrades, parking, additional structures, curb appeal and location of the home within the neighborhood.

Next, compare the prices of similar homes that are pending sale or under contract and homes that are currently available for sale. You can visit an open house for a nearby available property or look at photos online for comparison. Though pending sales won’t tell you what the accepted offer is on a home, they will give you a reference for what an acceptable asking price is for similar homes.

Researching comparable homes can be time-consuming, and you may not have the time or resources to gather all the information needed to make an informed decision on your own, so it may be a good idea to ask your real estate agent to do a comparative market analysis (CMA) for you to determine the home value given the current market conditions.

If the list price of the home you are interested in buying falls outside of the acceptable range of house prices researched, then there’s a chance the house may be overpriced.

2. Check how long the property has been on the market for sale

Find out what the average days on market (DOM) is for the local real estate market. This number changes with seasonal market changes, but it also adjusts depending on supply and demand for homes and if we are in a buyers’ or sellers’ market.

If a home has been sitting for much longer than the average DOM, then there is a good chance the home may be overpriced. Your real estate agent can advise what the average days on market is for the area, and if a listing is outside of the timeframe.

Homes can sit without selling for a variety of reasons. Sometimes a house may get a lot of traffic, but not a single offer. This often happens when a home presents itself well in online photos, but in person, the layout or structure of the house may not work for most home buyers. Sometimes major issues with the electrical, plumbing or HVAC systems aren’t conveyed in the online listing, and they are only uncovered during an in-person showing or during a home inspection.

And as I mentioned above, another reason a home can sit without selling is if home buyers perceive the house to be overpriced before even going to see it in person. This can be because the home actually is overpriced, or simply because the house doesn’t present itself in the property listing.

3. Unusual listing status changes

An overpriced house doesn’t always have to sit on the market for an extended period of time. Sometimes in a strong sellers’ market, you’ll see a house go from “available” to “temporarily off market” (TOM) or “pending” quickly, but then goes “back on market” (BOM) not long after. This usually happens because there was an issue with the home inspection, or with the bank appraisal or buyer financing. Here are just a couple of examples:

Temporarily off Market to Back on Market

If there are multiple offers on a house and the seller no longer wants to show the property after accepting an offer, the listing agent may put the home temporarily off market. During this time, the buyer with the accepted offer can perform the home inspection. If the home quickly goes back on market without entering pending status, then there may have been some issues uncovered in the home inspection that could affect the overall value of the home.

Pending to Back on Market

If a house moves past the inspection with no problems and enters pending status, but then goes back on market, it could be because the home did not appraise at the contract price. This means that a third-party appraiser hired by the buyer’s bank has valued the property lower than the agreed upon selling price, which could allow the buyer to back out of the contract.

These are just a few examples of why a house may have several status changes, but they aren’t the only reasons. So if you see a lot of status changes on a house, ask why the other home buyers walked away from the deal to gauge whether it may be an overpriced home.

4. Multiple price reductions

If a seller has reduced the asking price multiple times, it’s usually a clear sign that the home was, and maybe still is, overpriced. In most cases, home sellers will reduce their original asking price if they don’t receive any offers within two weeks of listing their home for sale.

If the sellers have to do this more than once, it usually means that the home started at a vastly higher price than what was acceptable for similar homes in the area. The sellers may have been unrealistic when initially choosing the higher listing price or they may not have realized how detrimental it is to overprice a home. It could also mean that there are major structural or system repairs needed that many buyers aren’t willing to take on.

Keep in mind that even though a house may have had a price reduction, it doesn’t guarantee that the house is now priced correctly. It just means that the seller acknowledged it was originally overpriced, but you should still consider the other factors in this article to decide if the new pricing validates the value of the home.

5. Lack of typical upgrades and maintenance

Look at the condition of similar sold properties in the neighborhood and compare the condition of the home you are looking to purchase with those recently sold homes. Consider what big ticket mechanical upgrades are customary for this price range, such as oil to gas fuel conversions, 200 amp electric system, or central air conditioning, and determine if the home you want to buy has these items, or if there is enough room in your offer to add these items on your own.

Being aware of this information will help you form a more accurate estimate of what a reasonable selling price for a home might be. If most homes selling for this price point have updated kitchens, appliances, bathrooms, electrical and HVAC systems, but this home has a boiler on its last leg and 30-year-old renovations, then there’s a good chance that it is an overpriced home.

6. Low ball offers 

If a home gets a lot of activity during the first two weeks it is available for sale, but the seller only receives low ball offers, then it’s a good sign the home is overpriced, and it is not worth the asking price. Unfortunately, as a buyer, you won’t always be privy to offer information, but your real estate agent may be able to get more information for you to better gauge the situation.

When a home is overpriced, home buyers are less likely to offer fair market value for the house because they know there won’t be much competition. Instead, you’ll see buyers offer prices that are much lower than comparable properties in the hopes of getting a deal. This is a sign that the seller should reduce the asking price to a more realistic pricing.

7. Stubborn seller won’t budge

Home selling can be an emotional experience for sellers, too. Even if a house is priced higher than comparable properties, a seller should be open to receiving feedback on pricing, condition, curb appeal, and other factors that affect the public perception of the house. Acknowledging these issues and/or fixing them can help sellers sell their house for more money.

Unfortunately, some sellers are too attached to the home they are selling and refuse to see any problems. Most agents will request feedback from in-person showings, and if most of the feedback is negative or mentions the same complaints, but the seller won’t adjust or fix the issues, then it’s likely the home is overpriced.

Final thoughts

Many buyers today feel pressured to make quick decisions about their home purchase without having the time to consider if the house is overpriced. Having a trusted and experienced real estate agent by your side will give you the advantage of accessing information that other buyers may not have access to, and the insight into market statistics that only a real estate professional will know.

In the end, it is still your decision to make. Take your time when viewing the property and compare it to other houses in the neighborhood. Don’t be afraid to ask every detail you need to know about the house and refer to your agent with any questions about the house itself or the process of home buying. 


Cristina Morizio

Long Island real estate agent Cristina Morizo
As an experienced REALTOR® and Long Island native, I know the ins and outs of the real estate market. I help home buyers, sellers, investors and homeowners navigate and negotiate. Questions? Ready to buy or sell? Let’s talk!

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